GST Update No 323 on allegations of fake invoice not mentioned in show cause notice

It is well settled principle that a show cause notice issued by the revenue department should contain all the ingredients prescribed under statue failing which makes it invalid. There had been plethora of cases in the past as well wherein the departmental officers had to face the agony of Courts on having a carelessness attitude. However, once again the one case on similar subject matter was reported before Bombay High Court in the case of Archana Textile Corporation V/s The State of Maharashtra and Ors. The decision imparted in this case is subject matter of our present update.The petitioner challenged the impugned order on various grounds wherein it was allegations as regards to fake invoices and fake norms were raised against the assessee. The petitioner submitted that the show cause notice did not contain any of these allegations and details. Hence, there is violation of principle of natural justice since the order is passed without giving an opportunity of hearing to the assessee.
The Court agreed to the submissions of the assessee and stated that the show cause notice issued dated 05.11.2019 was a bald show cause notice. Further, the copy of show cause notice tendered across the bar and taken on records was marked as “X” for identification. No details of claims or deductions made by petitioner were mentioned in the show cause notice. It was held that it was duty of the revenue department to provide all the details appropriately. Therefore, the procedure adopted is totally incorrect. The show cause notice issued should mandatorily contain all the details so that the petitioner can respond to same effectively. It was held that it is a serious lapse on the part of departmental officers which needs to be adhered to without any excuse. This happened because of the fact that the departmental officers are neither aware about the legal provisions nor they follow the principles of natural justice Therefore, the impugned order along with the show cause notice was quashed and set aside. It was directed to issue a fresh show cause notice to petitioner mentioning every detail and allegations. The above decision is once again another example demonstrating and highlighting the importance of issuing proper show cause notice. There had been various judicial pronouncements in the past as well wherein the show cause notice was quashed wither being improper or not served properly or not updated on the portal etc. The need of the hour is that a proper mechanism should be developed to streamline the process of issuance of show cause notice failing which the subject matter will be prone to unnecessary litigations. Even the author of this update has come across various show cause notices particularly relating to refunds wherein the allegations are given in 60 to 120 words. Nobody is able to understand the same and then poor taxpayer of his consultant approaches the department and ask about the details of show cause notice. Thereafter they are able to file the reply. Even after reading this judgement, in our view, every taxpayer is not able to move to High Court and as such one has to understand the same from the department only. This was not the case in erstwhile Excise and service tax regime. A proper and detailed show cause notice was issued to taxpayers. Either the portal is giving limited space to department officer or it provides a general show cause notice to officer and they issue the same. Even the order is being issued in the same fashion.

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GST Update No 323 on allegations of fake invoice not mentioned in show cause notice

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