The central legal point established in the judgment is the obligation to serve relied upon documents and grant an opportunity of personal hearing before passing an adverse decision, as per the principles of natural justice and the provisions of the JGST Act.

JUDGMENT :

DEEPAK ROSHAN J.

1. Heard learned counsel for the parties.

2. The instant writ application has been preferred for following reliefs:

(i) For issuance of an appropriate writ/order/direction for quashing/setting aside the show cause notice issued under Reference No. 98 dated 30.07.2020 (Annexure-5,) under section 73(1) and Rule 142(1) of the Jharkhand Goods and Services Taxes, (JGST) Act.

(ii) For issuance of further appropriate writ/order/direction for quashing/setting aside the ex-parte order being Reference No. 201 dated 15.09.2020 under section 73(9) of the JGST Act and DRC-07 dated 18.09.2020 (Annexure-10 and 11) respectively.

(iii) For unblocking credit ledger which was blocked on 14.02.2020 to the tune of Rs. 5,18,731/- even before serving the show cause notice under the JGST Act.

3. The brief facts of the case as disclosed in the writ application is that the Petitioner is a Partnership Firm, engaged in trading of iron and steel and is duly registered under the provision of GST Act being registration no. 20AAEFU1474E1ZM. The petitioner for the furtherance of his business activity, purchase steel from many other business entity; one of such is M/s Maa Kali Steel, Purlia Road, Chas, Bokaro being a registered supplier/dealer under the then JVAT and also under the present GST Act, having GSTIN No. 20BJYPS5228Q1ZA.

During March 18, the Petitioner has purchased steel worth Rs. 34,00,571/- (inclusive of SGST and CGST amounting to Rs. 5,18,725.50). The goods have been purchased after making payment of entire tax liability. On 04.02.2020, the petitioner was in receipt of a Form GST DRC-01A along with letter no.3985 dated 11.11.2019, wherein pursuant to administrative direction of the superior authority, an intimation of liability u/s 73(5) /74(5) of the JGST Act, alleging therein that the Petitioner has entered into a business transaction with a non-existing business entity namely, M/s Maa Kali Steel and directed to reverse the wrongly availed ITC with interest and penalty and thereby calculated penalty u/s 74 of the Act and was directed to pay the amount including interest and penalty, failing which SCN u/s 74(1) of the JGST be issued.

On 14.02.2020, without any information/notice the Respondent department suo motu blocked the credit ledger account of the Petitioner. On 30.07.2020, though the Respondent although dropped a proceeding under section 74(1) of the JGST Act; however, initiated proceeding under section 73(1) of the JGST Act and straightaway issued a show cause notice.

4. Ms. Amrita Sinha, learned counsel for the petitioner submits that the initiation of proceeding u/s 73 of the Act itself certifies the fact that no fraud or any willful misstatement or suppression of fact is there while availing ITC. She further contended that from the SCN, it is evident that so called non-existing supplier has duly obtained registration certificate from the Respondent department and has also filed GSTR-1 and GSTR-3B for the period under consideration and has duly paid the tax and there is no mismatch in the figure as declared by the supplier in its return as that declared by the Petitioner.

She further submits that merely on the intelligence note, the entire proceeding has been initiated without even supplying the copy of the documents relied upon by the respondent-Department. Learned counsel further draws attention towards Annexure-6 and 7 which is the copy of GSTR-1 and GSTR-3B of the so called non-existing dealer as downloaded from the web portal.

It is submitted that the said non-existing dealer was duly in existence till 26.06.2019 and that only on 27.06.2019, its registration was cancelled as evident from the government portal. Meaning thereby; during the period under consideration i.e. March 2018, M/s Maa Kali was duly having its registration and was in existence according to law and an active registered taxable person.

She contended that without giving any opportunity of hearing to the Petitioner as per section 75(4) of the Act an