Section 74 of the CGST Act, 2017— Show Cause Notice—Violation of Principle of Natural Justice - The petitioner sought quashing of the impugned summary of the SCN in Form GST DRC-01 dated 12.09.2018 and the summary of the order in GST DRC-07 dated 14th May, 2019 passed under Section 74 of the Act. The counsel for the petitioner submitted that the rectification applications preferred by the petitioner under Section 161 was also dismissed by two separate orders. Summary of the show cause notice in Form GST DRC-01 is not a substitute of the proper show cause notice. The court relied the decision in the case of NKAS Service Ltd., wherein it was held that Summary of Show Cause Notice in Form DRC-01 is not a substitute of show cause notice under Section 74(1). The court observed that in view of the settled preposition of law, the foundation of the proceeding in both the cases suffers from material irregularity and hence not sustainable being contrary to Section 74(1); thus, the subsequent proceedings/impugned Orders cannot sanctify the same. The impugned show cause notice in both the cases does not fulfill the ingredients of a proper show- cause notice and thus amounts to violation of principles of natural justice.

Held that:- The Hon’ble High Court set aside the summary of show-cause notices dated 12.09.2018 issued in Form GST DRC-01 and the orders dated 14.05.2019 issued under Section 74(9) and also the final orders dated 18.10.2021 passed after rectification and remanded the matter to the adjudicating authority to pass a fresh order in accordance with law from the stage of issuance of proper show cause notice.