The Hon’ble High Court of Jharkhand vide its order dated 11.07.2022 in the matter of M/s. Shyam Hardware Store versus The State of Jharkhand., Joint Commissioner of State Tax (Administration), Hazaribagh, Deputy Commissioner of State Tax, Investigation Bureau, Hazaribagh, Deputy Commissioner of State Tax, Ramgarh Circle, Ramgarh. State Tax Officer, Ramgarh Circle, Ramgarh in W.P. (T) No. 1117 of 2021, held that the inspection report does not fulfil the ingredients of a proper show cause notice and it amounts to violation of principles of natural justice.  Further, where the principles of natural justice is at stake, the words such as deemed, tantamount, does not hold merit.

The petitioner filed the present writ application challenging and praying for quashing/setting aside the summary of the order contained in Form GST DRC 07 dated 04.12.2020 as well as summary of rectification/withdrawal order contained in Form GST DRC-08 dated 07.12.2020 issued by the respondents for the period 2017-18, 2018-19, 2019-20 & 2020-21, whereby the petitioner has been directed to make payment of tax, interest and penalty on the alleged grounds of purported adjudication order.  Further, it was also prayed to declare the said purported order passed in exercise of powers under Section 61 & 73 of JGST Act, 2017 and the rectification/withdrawal order dated 07.12.2020 is without authority and is wholly illegal and arbitrary being passed in utter violation of provisions of JGST Act, and utter violation of principles of natural justice.

Facts: –

• That by an order dated 11.01.2020 of Joint Commissioner of State Tax (Admin), Hazaribagh Division, Hazaribagh, an inspection was conducted by the joint team of officers of Investigation Bureau and Ramgarh Circle in the premises of the petitioner and inspection report was prepared, and through it the petitioner was directed to appear on 17.01.2020 before the Joint Commissioner of State Tax (Admin.), failing which proceedings under Section 73, 50(1) & 125 of JGST Act would be initiated.
• That three discrepancies were alleged against the petitioner in the inspection report by the inspecting team, namely ‘short of goods in physical stock to the tune of Rs. 4,26,734.01, short of goods in summary stock for Rs.19918.00 and failure to declare additional place of business’, and the petitioner was directed to submit its explanations with respect to aforesaid discrepancies before the Joint Commissioner of State Tax (Admin).
• That in pursuance of the inspection report, an inquiry was initiated against the petitioner by the respondents and the petitioner was asked to appear before the authority with requisite books of accounts and the same was duly complied by the petitioner.
• Thereafter, based on the inspection dated 11.01.2020, petitioner was served summary of the order in Form GST DRC 07 separately for the period 2017-18, 2018-19, 2019-20 and 2020-2021, all dated 04.12.2020, levying alleged amount of tax, interest and penalty, in spite of the fact that the petitioner was regularly appearing before the respondent authority pursuant to the said inspection. Moreover, the petitioner was also served with three rectification orders as well as the summary of rectification/withdrawal order in Form GST DRC 08, all dated 07.12.2020, with respect to the three of the Form GST DRC 07 issued to the petitioner previously.  The petitioner being aggrieved of above filing the present writ-application. 

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