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IN THE GAUHATI HIGH COURT (HIGH COURT OF ASSAM, NAGALAND, MIZORAM AND ARUNACHAL PRADESH)
MANISH CHOUDHURY, J.
M/s Rezaul Islam – Appellant
Versus
The State Of Assam And 3 Ors. – Respondents
WP(C) 5539 of 2024
Decided on : 12-11-2024
(A) Central Goods and Services Tax Act, 2017 - Section 74 - Assam Goods and Services Tax Act, 2017 - Writ petition challenging Order-in-Original dated 16.08.2024 for erroneous refund claim - Petitioner contended lack of opportunity for personal hearing before the Adjudicating Authority - Court held that statutory remedy under Section 107 is adequate and efficacious, thus, writ petition not entertained - Principles of natural justice not violated as show cause notice was issued and petitioner failed to respond adequately - Court directed that if bank accounts remain frozen, appeal can be filed without pre-deposit. (Paras 9, 10, 14, 18)
Facts of the case:
The petitioner, engaged in coal business, claimed Input Tax Credit under CGST/AGST Act, but faced a demand for erroneous refund leading to freezing of bank accounts.
Findings of Court:
The court found that the petitioner had statutory remedies available and did not demonstrate exceptional circumstances to bypass them.
Issues: The main issues were whether the petitioner was afforded a fair hearing and if the statutory remedy was sufficient.
Ratio Decidendi: The court ruled that the principles of natural justice were not violated as the petitioner had the opportunity to respond to the show cause notice, and the existence of an adequate statutory remedy precluded the need for a writ.
Result: Writ petition disposed of.
JUDGMENT :
The petitioner in the present writ petition, preferred under Article 226 of the Constitution of India, has assailed an Order-in-Original dated 16.08.2024 passed under Section 74 of the Central Goods and Services Tax [CGST] Act, 2017/Assam Goods and Services [AGST] Act, 2017 for the period : April, 2022 – March, 2023 and a Summary of the Order dated 16.08.2024 in Form GST DRC-07 under Rule 142[5] of the corresponding Rules by the respondent no. 4. A direction has also been sought for not to give effect to the impugned Order-in-Original dated 16.08.2024 and the Summary of the Order dated 16.08.2024.
2. The petitioner no. 2 carries out his business in coal under the name and style of petitioner no. 1 with a Certificate of GST Registration no. 18AGTPI00801ZS. The petitioner has averred that the petitioner is entitled to Input Tax Credit [ITC] in respect of purchase of coal under the provisions of the Central Goods and Services Tax [CGST] Act, 2017/Assam Goods and Services [AGST] Act, 2017. The petitioner has contended that all the refunds were duly sanctioned and disbursed after causing full enquiry and the respondent no. 4 is the jurisdiction officer in so far as causing enquiry in respect of the assessment of the petitioner is concerned and the petitioner is entitled to get refund of ITC on zero-rated supplies made by it.
3. The petitioner has further stated that a Demand –cum- Show Cause Notice under Section 74 of the Assam GST Act, 2017 stood issued on 18.06.2024 followed by a Summary of the Order of Show Cause Notice dated 19.06.2024 in Form GST DRC-01 issued under Rule 100[2] and Rule 142[1][a] of the corresponding Rules. By the Demand –cum- Show Cause Notice, an amount of tax, interest and penalty had been demanded for the period from April, 2022 to March, 2023 with the allegation that the petitioner had claimed erroneous refund. In the Demand –cum- Show Cause Notice, it was mentioned that on 12.08.2022, the petitioner claimed a refund of Rs. 45,16,525/- for the tax period from March, 2022 to July, 2022 by stating the reason of refund as ‘Refund of ITC on export of goods and services without payment of tax’. Consequently, the refund amount was sanctioned on 17.08.2022 for Rs. 45,16,525/- [Rs. 16,63,755/- under IGST + Rs. 3,36,805/- under CGST + Rs. 3,36,805/-under SGST + Rs. 24,79,160/- under CESS]. In the said Show Cause Notice, the Adjudicating Authority had further mentioned that upon verification, it was found that the petitioner/assessee had claimed excess ITC amounting to Rs. 11,76,803/- in the year 2021-22 [comprising of IGST of Rs. 2,91,875/- + CGST of Rs. 80,484/- + SGST of Rs. 80,484/- + CESS of Rs. 7,23,960/-]. An amount of Rs. 1,23,250/- was also found accrued in 2B from cancelled taxpayers who passed on these fake ITC through circular trading. It was also found that the petitioner had claimed excess ITC amounting to Rs. 32,16,471.38 during the period from April, 2022 to March, 2023 against which the refund was claimed.
4. From the Demand –cum- Show Notice dated 18.06.2024, it is noticed that the Adjudicating Authority finding the alleged discrepancies/anomalies grave in nature posing serious threat to the interest of revenue, had freezed the bank account of the petitioner bearing no. 922020006834705 maintained at Axis Bank, Dhubri Branch, on and from 05.04.2024.
5. By the impugned Order-in-Original dated 16.08.2024 passed under Section 74 of the AGST Act and a Summary of the Order passed in Form GST DRC-07 issued under Rule 142[5] of the AGST Rule, the Adjudicating Authority passed an order of demand of Rs. 1,06,59,000/-as tax, interest and penalty for the period from April, 2022 to March, 2023 and the petitioner had been directed to make payment by 31.08.2024 failing which proceedings would be initiated against the petitioner to recover the outstanding dues.
5. Heard Ms. N. Hawelia, learned counsel for the petitioner and Mr. B. Gogoi, learned Standing Counsel, Finance & Taxation Department for all the res
The court affirmed that when a statutory remedy exists, a writ petition under Article 226 is not typically entertained unless exceptional circumstances are demonstrated.
The court emphasized the necessity of exhausting statutory remedies before seeking writ relief under Article 226.
The court affirmed that a statutory remedy under Section 107 of the CGST Act exists, thus not entertaining the writ petition under Article 226.
The court affirmed that alternative remedies must be exhausted before seeking writ relief, particularly in tax recovery matters, emphasizing jurisdictional compliance.
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 ....
The High Court affirmed that the issuance of a consolidated SCN for multiple financial years under the CGST Act is permissible, emphasizing the requirement of statutory compliance and the importance ....
The rejection of refund claims without providing an opportunity of being heard was a violation of the proviso to sub-rule (3) of rule 92 of the CGST Rules and the principles of natural justice, rende....
Proceedings under Section 74 of the CGST Act cannot be initiated without evidence of fraud or misstatement if prior proceedings under Section 73 have been concluded.
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