Summary SCN Form DRC-01 Issued Without Detailed Notice Is Invalid and Set Aside

Issue

Facts

• The petitioner, a registered taxpayer, was issued a pre-show cause notice in Form DRC-01A by the respondent proposing tax demands.
• In response to Form DRC-01A, the petitioner requested additional time to file a formal reply.
• Before the petitioner could submit the reply to DRC-01A, the respondent issued a summary notice in Form DRC-01.
• The respondent failed to attach or serve the detailed show-cause notice required alongside Form DRC-01.
• Aggrieved by the issuance of the summary notice without the accompanying detailed SCN, the petitioner filed a writ petition challenging the validity of Form DRC-01.

Decision

• The High Court held that issuing a summary notice in Form DRC-01 without attaching the detailed show-cause notice demonstrates a complete non-application of mind by the authority.
• A summary action in Form DRC-01 without serving the corresponding detailed SCN is legally unsustainable.
• The summary notice issued in Form DRC-01 was quashed and set aside in favour of the assessee.
• The petitioner was granted permission to file a reply to the initial pre-SCN in Form DRC-01A within a stipulated timeframe.
• The respondent was directed to decide the matter on its merits after providing the petitioner an opportunity of hearing.

Key Takeaways

• Form DRC-01 Is Not a Substitute for SCN: Form DRC-01 is merely a summary of the show-cause notice mandated under Rule 142; it cannot replace the detailed statutory show-cause notice required under Section 73 or Section 74.
• Mandatory Requirement of Detailed Notice: Tax authorities must issue and serve a comprehensive, detailed show-cause notice setting out facts, grounds, and calculations alongside or prior to issuing Form DRC-01.
• Adherence to Due Process: Passing summary orders or issuing Form DRC-01 without providing an adequate opportunity to respond to preliminary notices (DRC-01A) or detailed SCNs violates the principles of natural justice.