The court emphasized the necessity of issuing a show cause notice before passing orders under GST, ruling that failure to do so invalidates the order.

JUDGMENT :

BHARGAV D. KARIA, J.

1. Heard learned advocate Mr. Anand Nainavati for the petitioner and learned Assistant Government Pleader Ms. Shrunjal Shah for the respondent.

2. Rule returnable forthwith. Learned AGP Ms. Shrunjal Shah waives service of notice of rule on behalf of respondent State.

3. By this petition under Article 227 of the Constitution of India, the petitioner has prayed for the following reliefs:

“a) That Your Lordships may be pleased to issue a writ of mandamus or a writ in the nature of mandamus, a writ of certiorari or a writ in the nature of certiorari or any other appropriate writ, order or direction quashing and setting aside the impugned summary of the order issued vide FORM GST DRC 07 having reference ZA240119000357X dated 11.01.2019; no. and (Exhibit-1)

(b) That Your Lordships may be pleased to issue a writ of mandamus or a writ in the nature of mandamus, a writ of certiorari or a writ in the nature of certiorari or any other appropriate writ, order or direction quashing and setting aside the impugned recovery notice dated 21.03.2024;(Exhibit -2)

(c) That Pending the hearing and final disposal of this petition, stay the operation of impugned summary of the order issued vide FORM GST DRC 07 having reference no. ZA240119000357X dated 11.01.2019 and not initiate any recovery proceedings against the petitioners; (Exhibit-1)

(d) For ad-interim relief in terms of prayer (c) above;

e) Pass such other order or orders as the Hon'ble Court may deem fit and proper in the circumstances of the case;

(f) for costs of this Petition;

(g) for such further and other reliefs as the nature and circumstances of the case may require.”

4. Brief facts of the case are that the petitioner is a private limited company and is engaged in the business of manufacturing of packaging materials falling under Chapter Heading 3923 at their factory located at Kalol, Gandhinagar, Gujarat.

5. In pre-GST regime, the petitioner was registered with the Central Excise department and were regularly filing all statutory returns as required under the Central Excise laws and availing CENVAT credit facility on inputs, input services and capital goods received by them. With the introduction of the Goods & Services Tax ("GST") regime w.e.f. 01.07.2017, the petitioner was migrated to the GST regime with GSTIN No.24AAMCS5827N1ZQ.

6. After introduction of GST, all the indirect taxes were subsumed under GST law. As per the GST law, credit of inputs, inputs services and capital goods which were lying unutilised as on the appointed date i.e., 01.07.2017 can be claimed by the petitioner.

7. In the course of conducting its business, the petitioner receives supplies of inputs and input services from various suppliers. Wherever eligible, the petitioner avails Input Tax Credit ('ITC') of the supplies received and captures such availment in the requisite forms as prescribed under the CGST Act read with the CGST Rules, IGST Act with the IGST Rules and under the Gujarat State Goods and Services Tax Act, 2017 and paid GST @ 18% on the finished goods supplied in the GST regime.

8. In accordance with the relevant instructions, the petitioner was periodically filing FORM GSTR-3B from July 2017 within the stipulated timelines.

9. Scrutiny of returns filed by the petitioner was carried out by the officers of respondent No.3 in terms of Section 61 of CGST Act, 2017 read with Rule 99 of the CGST Rules, 2017.

10. The petitioner was issued with Form GST ASMT-10 dated 15.11.2018 to explain the reasons for the discrepancies in the value of Total ITC as per GSTR-3B and value of Total ITC as per GSTR-2A showing difference of INR 96,86,603/-.

11. Petitioner addressed letter dated 16.11.2018 to the respondents stating that the difference is on account of Purchase made from M/s ONGC Petro Additions Ltd. (SEZ Unit) and IGST @ 18% amounting to Rs. 94,38,472/- paid thereon was not reflected in GSTR 2A and that mere mismatch between ITC claimed under FORM GSTR-2A and FORM GSTR-3B would not imply ex