Order Date – 03 August 2022

Facts – 

• The Petitioner, Roushan Kumar Chouhan, is engaged in the business of civil construction.
• It was alleged that there was a mismatch in GSTR-3B and GSTR-2A for the period in question and that the petitioners have taken undue ITC to which they were not entitled. 
• Petitioners alleged that the show-cause notice does not strike out the relevant particulars and does not even enumerate the contravention which the petitioners have been called upon to reply.
• Petitioners had also taken a plea that Summary of the Order contained in Form GST DRC-07 imposes 100% penalty which is impermissible under the provisions of Section 73(9) of the Act of 2017 and therefore 100% penalty can only be levied in a proceeding under section 74 (9) of the Act of 2017. 
• Therefore the petitioners filed a petition.

Issue – 

• Whether GST DRC-01 form can substitute the requirement of a proper show cause notice under section 73(1) of the Act of 2017?

Order – 

• The Tribunal observed that the notices under section 73(1) of the CGST Act at Annexure-1 of the respective writ petition is in the standard format and neither any particulars have been struck off, nor specific contravention has been indicated to enable the petitioner to furnish a proper reply to defend itself. The show-cause notices can therefore, be termed as vague.
• Relying on M/s NKAS SERVICES PRIVATE LIMITED v. State of Jharkhand and others in which it was held that summary of show cause notice in Form GST DRC-01 cannot substitute the requirement of a proper show cause notice under section 73(1) of the Act of 2017.
• Hence the petition was allowed and the court gave the liberty to authorities to furnish a proper show cause notice to initiate the proceeding again.