The Gauhati High Court recently ruled on a case involving M/s Riyan Enterprises, a government contractor in Assam with an annual turnover below ₹1 crore, who was registered under GST. The GST department had issued an order under Section 73 of the AGST Act, alleging tax liability against the petitioner without serving a proper statutory show cause notice. Instead, a summary notice in Form GST DRC-01 was issued, leading to the suspension of the petitioner's GST registration due to unpaid liabilities.
The central issue was whether a summary notice in Form GST DRC-01, without a proper notice under Section 73(1), suffices for a valid GST demand order. The court emphasized that Form GST DRC-01 is merely a summary and cannot replace the mandatory show cause notice required by Section 73(1). It stated that a valid adjudication process must commence with a proper statutory notice issued by the Proper Officer.
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The court further noted that compliance with Section 73 and Rule 142 is a mandatory pre-condition before any order under Section 73(9) can be passed. As no proper notice was issued to the petitioner, the order dated 30.04.2024 was quashed. However, the department was allowed to initiate fresh proceedings, adhering to the due legal procedure.
Order Date - 13 May 2026
Parties : M/s Riyan Enterprises vs State of Assam & Others
Facts -
- M/s Riyan Enterprises, a government contractor having annual turnover below ₹1 crore, was registered under GST and carried on business in Assam.
- The GST department passed an order dated 30.04.2024 under Section 73 of the AGST Act alleging tax liability against the petitioner. The petitioner challenged the order before the High Court.
- The petitioner argued that no proper show cause notice under Section 73(1) was ever served. Instead, only a summary show cause notice in Form GST DRC-01 dated 18.12.2023 was issued.
- Subsequently, the department also initiated cancellation proceedings of GST registration on the ground of unpaid liabilities and suspended the registration from 08.01.2026.
Issue -
- Whether issuance of only a summary show cause notice in Form GST DRC-01, without a proper notice under Section 73(1) of the AGST Act, is sufficient for passing a valid GST demand order?
Order -
- The Court observed that Form GST DRC-01 is merely a summary of the proposed demand and cannot replace the mandatory show cause notice required under Section 73(1). A valid adjudication proceeding can begin only after issuance of a proper statutory notice by the Proper Officer.
- It was further observed that compliance with Section 73 and Rule 142 is a mandatory pre-condition before passing any order under Section 73(9). The proper officer must independently issue the notice, statement, and final order in accordance with law.
- It was further observed that compliance with Section 73 and Rule 142 is a mandatory pre-condition before passing any order under Section 73(9). The proper officer must independently issue the notice, statement, and final order in accordance with law.
- The Court held that since no proper and prior show cause notice was issued to the petitioner, the impugned order dated 30.04.2024 was liable to be quashed. However, liberty was granted to the department to initiate fresh proceedings in accordance with law after following due procedure.
