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IN THE HIGH COURT OF GAUHATI, NAGALAND, MIZORAM AND ARUNACHAL PRADESH
Manish Choudhury, J.
Ashika Business Private Limited - Petitioner
Versus
Union of India, Represented by the Secretary, Ministry of Finance, Department of Revenue, having its office North Block, New Delhi and ors. – Respondents
Writ Petition [C] No. 2364 of 2024
Decided On : 09-05-2024
Demand-cum-Show Cause Notice - Jurisdiction of the Court - Section 73 of the Central Goods and Services Tax Act, 2017 - Summary of the acts and sections referenced and discussed by the court: Section 73, Section 65, Rule 101 of the Central Goods and Services Tax Rules, 2017 - The court discussed the provisions of Section 73 and Section 65 of the CGST Act, 2017, as well as Rule 101 of the CGST Rules, 2017. The court also referred to Instruction no. 04/2023-GST issued by the Central Board of Indirect Taxes and Customs (CBIC) regarding the serving of the summary of notices and orders electronically on the portal.
Fact of the Case:
The petitioner, a private limited company, sought to challenge a Demand-cum-Show Cause Notice and an Order-in-Original issued under the Central Goods and Services Tax Act, 2017. The petitioner had been granted registration under the CGST Act and had been complying with statutory requirements. The tax authorities conducted an audit and issued a Demand-cum-Show Cause Notice alleging tax discrepancies. The petitioner submitted a reply, and subsequently, the Order-in-Original was passed confirming the demand and imposing penalties. The petitioner filed a writ petition challenging the proceedings, alleging non-compliance with statutory prescriptions and violation of principles of natural justice.
Finding of the Court:
The court found that the writ petition was maintainable under Article 226 of the Constitution of India. However, the court exercised its discretion and decided not to entertain the writ petition. The court held that the petitioner had not made out an exceptional case to interfere with the Demand-cum-Show Cause Notice and the Order-in-Original in the extra-ordinary and discretionary jurisdiction under Article 226 of the Constitution of India.
Issues: The issues raised included non-compliance with statutory prescriptions, violation of principles of natural justice, and the authority issuing the Demand-cum-Show Cause Notice being different from the one passing the Order-in-Original.
Ratio Decidendi: The court held that the petitioner had waived the requirement of uploading the notice electronically on the portal by not raising the issue in its reply to the Demand-cum-Show Cause Notice. The court also found that the petitioner had failed to avail the opportunity of personal hearing and left the case to be decided based on the written reply. The court concluded that the petitioner had not been able to make out an exceptional case to interfere with the proceedings.
Final Decision: The court decided not to entertain the writ petition, but clarified that the non-entertainment of the writ petition would not preclude the petitioner from raising all contentions on facts and law before the statutory appellate authority.
JUDGMENT :
The instant writ petition seeking to invoke the extra-ordinary and discretionary jurisdiction of this Court under Article 226 of the Constitution of India is preferred to assail a Demand-cum-Show Cause Notice bearing no. GADT/CnG/ADT/GST/6758/2021-Gr-22-CGST-SLCR ADT CIR-ADT SHILLONG/308 [‘Demand-cum-Show Cause Notice’, for short] dated 22.09.2023 issued under sub-section [1] of Section 73 of the Central Goods and Services Tax Act, 2017 [hereinafter referred to as ‘the CGST Act, 2017’, for short] and an Order-in- Original bearing no. 15/GST/AC/SIL/2023-24 [‘Order-in-Original’, for short] dated 14.12.2023 passed under sub-section [9] of Section 73 of the CGST Act, 2017 by the Assistant Commissioner, Central [Goods and Service Tax] & Central Excise Division, Silchar as the Adjudicating Authority.
2. The writ petitioner herein is a private limited company incorporated under the Companies Act, 1956 and it carries on the business inter alia of service provider. It has its registered office at Kolkata, West Bengal. With the enactments of the CGST Act, 2017 and the Assam Goods and Services Act, 2017 [‘the AGST Act, 2017] and their coming into effect w.e.f. 01.07.2017, the petitioner company applied for registration under the said Acts and has been granted registration vide GSTIN 18AAECA7729F1ZL on 01.08.2017. The petitioner company is assessed under the office of the respondent no. 2, that is, the Principal Commissioner, Central GST & Central Excise Commissioner, GST Bhawan, Kedar Road, Machkowa, Guwahati, Pin - 781001, Assam. The petitioner company has asserted that it has been duly complying with all statutory requirements under the CGST Act, 2017/AGST Act, 2017 by way of filing its Statements of Outward Supply in GSTR – 1 and Monthly Returns in GSTR-3B till this date.
3. Section 65 of Chapter XIII of the CGST Act, 2017 has a provision for Audit by the tax authorities. As per sub-section [1] of Section 65 of the CGST Act, 2017, the Commissioner or any officer authorised by him, by way of a general or a specific order, may undertake audit of any registered person for such period, at such frequency and in such manner as may be prescribed. Sub-rule [2] of Rule 101 of the Central Goods and Services Tax Rules, 2017 [‘hereinafter referred to as ‘the CGST Rules, 2017’, for short] has provided that where it is decided to undertake audit of a registered person in accordance with the provisions of Section 65, the proper officer shall issue a notice in FORM GST ADT-01 in accordance with the provisions of sub-section [3] of Section 65. The proper officer, as per sub-rule [4] of Rule 101, is to inform the registered person of the discrepancies noticed, if any, as observed in the audit and the said person may file his reply and the proper officer shall finalise the findings of the audit after due consideration of the reply furnished.
4. After conducting an audit of the books of accounts and records of the petitioner company for the period from July, 2017 to March, 2019 to the extent available, the discrepancies observed in the course of audit was informed to the petitioner company vide its Letter on the subject – ‘Audit Observations’, dated 30.11.2021. After issuance of the Letter dated 30.11.2021, the respondent no. 3 issued a Corrigendum to ‘the Audit Observations’ on 16.12.2021. In response to ‘the Audit Observations’ made by the respondent no. 3, the petitioner company submitted its Reply on 30.12.2021 wherein the petitioner accepted some of the liabilities as noted in ‘the Audit Observations’ and duly discharged the said liabilities voluntarily in Form GST DRC-03.
5. Sub-section [6] of Section 65 requires that on conclusion of audit, the proper officer shall, within the stipulated period, inform the registered person, whose records are audited, about the findings, his rights and obligations and the reasons for such findings. As per sub-rule [5] of Rule 101 of the CGST Rules, 2017, on conclusion of the audit, the proper officer sha
The court emphasized that while an alternative remedy is available, the High Court has the discretion to entertain a writ petition. The court also highlighted that the availability of an alternative ....
Writ petitions against quasi-judicial authorities are not maintainable if statutory remedies are available unless exceptional circumstances like natural justice violations are proven.
Writ petitions challenging show cause notices should not be entertained unless exceptional circumstances exist; petitioners must exhaust statutory remedies available under tax laws.
Tax liability must be established based on actual statutory provisions, not presumptions; authorities cannot invoke extended limitation without finding willful non-disclosure.
Court held that tax demands require adherence to statutory limits, and if payment is made prior to notice issuance, penalties are not justified.
The Court reaffirmed the principle that alternative remedies must be exhausted before seeking writ relief in tax matters.
The judgment emphasizes the rare interference at the show cause notice stage and the availability of alternative statutory remedies, highlighting the temporary nature of interim orders and the need f....
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