SCN issued without issuance of DRC-01A is valid where entire tax amount is disputed by taxpayer

The Hon'ble Allahabad High Court in Elesh Agrawal v. Union of India [WRIT TAX NO. 753 OF 2023 dated May 31, 2023] disposed the petition and held that in case where assessee has disputes all the facts and allegation stated in the show cause notice the requirement of issuance of DRC-01A would be mere formality however, if issuance of DRC-01A would have serviced any benefit to the assessee, it would have been imperative for the court to enforce such notice on the Revenue Authorities.

Facts

Elesh Agrawal ("the Petitioner") was served with a Form DRC- 01 (Show cause notice no. 59/2022-23) dated February 24 ,2023 ("the Impugned SCN") demanding total penalty for INR 1,05,05,00,498/- under Section 142(1A) of the Central Goods and Services Tax Act, 2017 ("the CGST Act") and INR 25,000 under Section 142 (3) (a) and (d) of the CGST Act 2017 each respectively.

The Petitioner contended that the Revenue Authorities has not issued Form DRC- 01A before serving the Impugned SCN moreover, the Revenue Authority has not been uploaded the Impugned SCN on the GST portal.

The Petitioner further contended that by virtue of Section 74(5) of the CGST Act the Revenue Department was bound to allow the Petitioner opportunity to pay up the alleged defaulted amount together with penalties on self-assessed basis and if that amount were to be paid by the Petitioner, no adjudication proceeding may arise.

Issue

Whether issuance of the Impugned SCN without intimation of liability in Form DRC-01A is sustainable?

Held

The Hon'ble Allahabad High Court in WRIT TAX NO. 753 OF 2023held as under:

• Noted that, it is true that Revenue Authorities must give reasonable opportunity of hearing in adjudication proceedings, and further preliminary notice may be issued at the same time. 
• Held that, the issuance of preliminary notice would have been mere formality since, the petitioner has disputed the entire amount of penalty proposed to be imposed. However, if issuance of preliminary notice would have rendered any benefit to the assessee the court would have enforced such issuance of preliminary notice on Revenue Authority.
• Directed the Revenue Department to ensure that all documents required to be uploaded on the GST portal and required to be communicated to the Petitioner through electronic mode to be uploaded and communicated within 48 hours.