A Voluntary Statement Cannot Substitute A Statutory Requirement Of Pre- Show Cause Notice Consultation Under Rule 142(1A) – Delhi High Court

The Hon’ble High Court of Delhi vide its order dated 18.05.2022 in the matter of Gulati Enterprises Vs.  Central Board of Indirect Taxes and Customs & Ors. in W.P.(C) 5407/2020 & CM APPL. 19473/2020, held that pre-show cause notice consultation was mandatory under the unamended Rule 142(1A) and a voluntary statement by an assessee cannot substitute a statutory notice, which is contemplated under Rule 142(1A) of the CGST Rules, 2017.

The petitioner filed the present writ-petition challenging the show cause notice dated 21.05.2020 wherein demand of IGST, CGST, SGST & Cess was proposed against the petitioner under section 74 of the CGST Act, along with interest under Section 50 and penalty under section 122.

Petitioner’s Submissions:

  • It was submitted on the behalf of the petitioners that mandatory requirement of pre-show cause notice consultation as provided in Rule 142(1A) of the CGST rules, 2017 during the relevant period, has not been adhered to by the respondents.
  • It was submitted that requirement of pre-show cause notice consultation has to be read with Section 74 of the Act and after the introduction of GST on 01.07.2017, the respondents/revenue cannot move away from the requirement of pre-show cause notice consultation.
  • That referring to a statutory form GST DRC-01A, it was contended that perusal of the form shows that the revenue was required to not only mention the tax and cess components, but also the period for which it is claimed. Further the respondents/revenue was also required to ‘furnish the grounds and the quantification of goods/services, on the basis of which demand of tax and cess has been proposed.

Respondents Submissions:

  • It was submitted on the behalf of the respondents/revenue that at the time of issuance of show cause notice i.e., 21.05.2020, the said statutory form was not activated on the web portal and for the said reason pre-show cause notice consultation could not be issued to the petitioner.
  • It was further submitted that the authorized person of the petitioner has already given a voluntary statement before the concerned officer, therefore, there is no need for issuance of a pre-show cause notice consultation.

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