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IN THE HIGH COURT OF JHARKHAND AT RANCHI
RONGON MUKHOPADHYAY, DEEPAK ROSHAN, JJ.
M/s. Aditya Medisales Limited, through its Director, Mr. Rajiv Pandya – Appellant
Versus
The State of Jharkhand – Respondent
W.P. (T) No. 4338 of 2022
Decided on : 09-10-2023
JUDICIAL REVIEW - Taxation - Jharkhand Goods and Service Act, 2017 - Section 140(1), 140(3), 73, 79 - The court quashed and set aside the summary of show cause notices and orders due to the absence of proper show cause notices and adjudication orders, and held that the initiation of proceedings was bad in law. The court also highlighted that the appellate authority's disallowance of transitional credit was based on considerations that were the subject matter of assessment under the previous law, and that the actions of the Respondent Bank in holding the amount were invalid.
Fact of the Case:
The petitioner, a medicine trader, claimed transitional credit under the Jharkhand Goods and Service Act, 2017 (JGST Act) for tax paid on medicinal products under the previous law. The petitioner's claim was partially rejected by the appellate authority, leading to a demand for payment of tax, interest, and penalty. The Respondent Bank held the petitioner's bank account, and the assessment order for the previous year found no discrepancies in the petitioner's figures of purchases.
Finding of the Court:
The court found that the initiation of proceedings was bad in law due to the absence of proper show cause notices and adjudication orders. It also held that the appellate authority's disallowance of transitional credit was based on considerations that were the subject matter of assessment under the previous law. The court further determined that the actions of the Respondent Bank in holding the amount were invalid.
Issues: The issues involved the denial of transitional credit, the validity of the initiation of proceedings, and the actions of the Respondent Bank in holding the amount.
Ratio Decidendi: The court held that the absence of proper show cause notices and adjudication orders rendered the initiation of proceedings bad in law. It also emphasized that the disallowance of transitional credit was based on considerations that were the subject matter of assessment under the previous law, and that the actions of the Respondent Bank in holding the amount were invalid.
Final Decision: The court quashed and set aside the summary of show cause notices and orders, and allowed the writ application. It also disposed of any pending I.As., with no orders as to cost.
JUDGMENT :
Deepak Roshan, J :
Heard learned counsel for the parties.
2. The instant Writ application has been preferred by the petitioner for following reliefs:-
(ii) For the issuance of an appropriate writ/order/direction including a writ in the nature of a certiorari, quashing and setting aside the summary of show cause notices dated 29.10.2018 (Annexure - 3) and 14.12.2018 (Annexure issued in Form GST DRC-01 in as much the same was not accompanied by a proper show cause notice under Section 73 of the JGST Act in terms of Rule 142(1)(a) of the JGST Rules, and further because it does not contain any particulars regarding the irregularity committed by the Petitioner to enable it to reply to the allegations contained therein.
(iii) For the issuance of an appropriate writ/order/direction including a writ in the nature of a certiorari, quashing and setting aside the summary of the order dated 16.1.2019 issued in Form GST DRC-07 (Annexure 2) in as much as the same was not accompanied by a detailed order under Section 73 of the JGST Act setting out the basis for the decision and further because the passing of detailed order dated 16.01.2019 referred to in Form GST DRC-07 does not find any mention in the order sheet.
(iv) For the issuance of an appropriate writ/order/direction including a writ in the nature of a certiorari, be not issued quashing and setting aside the notice issued under Section 79 in Form GST DRC-13 dated 10.3.2021 (Annexure - 10) as the same is thoroughly illegal and arbitrary and is based on an erroneous order.
(v) For the issuance of appropriate writ/order/direction including a writ in the nature of a mandamus to the Respondent State Bank of India to release the Petitioner's Bank Account to extent of Rs.19,69,441 which has been kept on hold since 19.3.2021 as the same is beyond its authority and de hors the provisions of the JGST Act.
3. The case of the petitioner is that it primarily deals in medicine and medicinal products through its depot in the State of Jharkhand. Under the JVAT Act, more particularly under Section 9(2), tax on medicinal products could be levied at the first point of sale on the MRP thus, the Petitioner on purchase of the medicinal products, paid tax at the MRP. At the time of resale, the Petitioner could recover the tax paid from the buyer.
Upon coming into force of the Jharkhand Goods and Service Act, 2017 (hereinafter to be referred as JGST Act), the Petitioner transitioned credit amounting to Rs. 87,34,107/- in terms of Section 140(1) and 140(3) of the JGST Act. It is the case of the petitioner that u/s 140(1) transition can be claimed of that amount which is reflected as credit in the last return filed under the JVAT Act. This is reflected in Column 5(c) of TRAN – 1. The amount transitioned under this head was Rs. 6,39,335/-. Under Section 140(3) transition can be claimed in respect of goods that have suffered tax at the first point of sale and are held in stock. This is reflected in Column 7(c) of TRAN – 1. The amount transitioned under this head was Rs. 80,94,772/-.
Petitioner received a summary of order in Form DRC – 07 wherein it had been directed to pay Rs. 1,18,78,385.52/- which included Rs. 87,34,107/- (the entire amount of transitional credit), Rs. 8,73,410.70/- as penalty and Rs. 22,70,867,82/- as interest. The summary of order refers to
The main legal point established in the judgment is that the absence of proper show cause notices and adjudication orders rendered the initiation of proceedings bad in law, and that the disallowance ....
The main legal point established in the judgment is the violation of principles of natural justice and the disregard of mandatory provisions of the GST Act by the respondent, leading to the quashing ....
The main legal point established in the judgment is the non-compliance of statutory provisions under the Jharkhand Goods and Services Tax Act, 2017 (JGST), denial of principle of natural justice, and....
The main legal point established in the judgment is the mandatory and imperative nature of the show cause notice requirement under Section 74(1) of the JGST Act and the need for specific charges in t....
Transitional credit recognized in GST Form TRAN-1 must be considered for refund claims under Section 54 of the CGST Act, regardless of its verification timing.
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.
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