The main legal point established in the judgment is the requirement for the respondents to proceed from the stage of show cause notice after following the principle of natural justice.

JUDGMENT :

Deepak Roshan, J.

Heard learned counsel for the parties.

2. Since both these writ applications are interconnected and common issue is involved, as such both are being heard together and disposed of by this common judgment. W.P.(T) No. 2762 of 2021 is with respect to the Tax period from April 2018 to March 2019 whereas W.P.(T) No. 2798 of 2021 is with respect to the Tax period from July 2017 to March 2018.

3. The writ applications have been preferred by the petitioner for quashing and setting aside show cause notices, both dated 23.07.2020, (Annexure-3 in both applications) issued under section 73(1) and Rule 142(1) of the Jharkhand Goods and Services Taxes, (JGST) Act and also for quashing and setting aside the adjudication orders, both dated 19.10.2020, issued under section 73(9) of the JGST Act and DRC-7, both dated 19.10.2020 (Annexure-4 & 4/1 respectively in both cases).

The petitioner has further prayed for a direction to the respondents for unblocking credit ledger which was blocked on 17.02.2020 and on 18.02.2020 to the tune of Rs. 47,38,408/-; however, during pendency of these applications, the credit ledger has been unblocked though the amount has been realized.

4. The case of the petitioner is that that it is engaged in trading of Railway scraps and is duly registered under the provision of GST Act. An inspection was carried out at the business premises of the petitioner at the instance of administrative direction dated 25.06.2019 issued by JCST based on one intelligence note dated 13.06.2019 alleging therein that the petitioner is engaged in availing ineligible credit of input tax under fake invoices by engaging himself in bill trading/circular trading without physical movement of goods. No inspection report, whatsoever, has ever been served upon the petitioner nor the documents relied upon has ever been supplied to the petitioner. Further, without any information/notice the respondent-Department suo moto blocked the credit ledger account of the petitioner and the petitioner was in receipt of DRC-01A being intimation of liability under section 74 (5) of JGST Act asking him to pay the amount to the tune of Rs. 1,35,40,420.60/-failing which SCN will be issued under section 74(1) of the JGST Act, and if the petitioner wished to file the written submissions, same can be filed by 12.03.2020. Pursuant thereto, the petitioner accordingly filed written submission alongwith all the documentary proof that the transactions have actually taken place and it is not a sham transaction. The respondent although dropped the proceeding under section 74(1) of the JGST Act, however, initiated proceedings under section 73(1) of the JGST Act and straightaway issued show cause notices, without issuing DRC-01A. From perusal of SCN, it is clear that all the submissions and documents produced therein being copy of invoices, e-way bills, measurement slips, proof regarding payment against good transport agency, etc. were duly verified and found genuine. However, merely for the reason that a proceeding under section 74 of the JGST Act has been initiated against the supplier of the petitioner namely M/s Jai Jawan Khastha Bhandar and M/s Priti Enterprises, liability has been fastened upon the petitioner under section 73(1) of the JGST Act. Petitioner again submitted a detailed reply alongwith the proof of the transactions entered into with its suppliers but without considering the submissions and even without giving the opportunity of hearing to the petitioner, the respondent authority passed the adjudication order under section 73 of the JGST Act merely on the ground as mentioned in the SCN that as the supplier of the petitioner has utilised its ITC in order to discharge its tax liability, there is no actual payment of tax and thus the condition