Form GST DRC-01A a pre-show cause notice intimation intending on reducing litigation: Allahabad HC

The Allahabad High Court has in one of its Order said that Form GST DRC-01A is a pre-show cause notice which provides an opportunity to the dealer to resolve the dispute by depositing or in case of disagreement to face the adjudication proceedings under the Act.

Learned counsel for the petitioner, Aditya Pandey submits that before issuing the impugned notice dated 20.01.2022 under Section 74(1) of the CGST/UPGST Act, 2017 in Form GST DRC 01, the statement as required under Rule 142 (1A) was not submitted by the proper officer to the petitioner. Therefore, on account of non-compliance of the provision of Rule 142 (1A), the impugned notice deserves to be quashed.

He Further Submitted that even if the input tax credit is blocked invoking the provisions of Rules 86A of the Rules, a negative Input Tax Credit cannot be shown otherwise it would amount to stopping the dealer from filing his return and depositing tax therewith.

As per Court, prima facie, it appears that Section 74(1) read with Rule 142(1A) intends to afford an opportunity to the dealer/ assessee on a pre-show cause notice stage which shall ultimately benefit both, e the assessee and the department, and shall also reduce litigation. This also indicates to follow the principles of natural justice at a pre-show cause notice stage.

Court as an interim measure provided petitioner permission to file his return along with proof of deposit of tax for the relevant tax period for which return is being filed.