2019 (12) TMI 162 - HC - Service Tax

Principles of natural justice - Issuance of SCN after making inquiry - Deliberate concealment of material facts - Respondent impleaded in his personal capacity - grievance of the Petitioner is that in respect of the earlier notices issued by the Respondents, no final determination has been made or communicated to the Petitioner. On each occasion, the Petitioner has submitted its replies which have been ignored while issuing impugned show cause notice - HELD THAT - The position is not as the one projected by the Petitioner, namely, rampant issuance of notices, one after another, without considering the fact that the earlier notices issued to Petitioner had been replied. The Respondents have followed the statutory scheme. The earlier notices were only to make inquiries, and it is only the impugned show cause notice which is a Substantive Show Cause Notice to show cause as to why the amount ₹ 4,39,44,304/-, allegedly wrongly carried forward in the GST electronic credit ledger in GST TRAN-1 statement, should not be recovered under Section 73 of the Act along with interest, and why penalty should not be imposed upon the Petitioner. There is no jurisdictional error in issuance of the impugned show cause notice. The matter is at the stage of the examination of the Petitioner s response to the show cause notice - no interference is called for at this stage by this Court - Petition dismissed.

Issues:
1. Declaration sought against Respondent No. 4 for arbitrary and malicious action.
2. Quashing of impugned show cause notice issued by Respondent No. 2.
3. Petitioner's revised ST-3 return and subsequent notices issued by Respondents.
4. Allegation of no final determination communicated by Respondents.
5. Respondents' counter affidavit and legal provisions invoked.
6. Examination of Petitioner's responses and impugned show cause notice.
7. Jurisdictional error in issuance of show cause notice.
8. Judicial view on the matter and dismissal of the petition.

Analysis:

1. The Petitioner filed a petition seeking a declaration against Respondent No. 4 for arbitrary and malicious actions, specifically challenging the impugned show cause notice issued by Respondent No. 2. The Petitioner alleged deliberate concealment of material facts by Respondent No. 4, seeking quashing of the mentioned notice.

2. The Petitioner revised its ST-3 return, significantly increasing the input tax credit, leading to notices from the Respondents. The notices raised concerns regarding the discrepancies in CENVAT credit balances and requested specific documentation for verification, initiating a series of responses and subsequent notices.

3. Despite the Petitioner's consistent responses to the notices, the final determination was pending, prompting the Petitioner's grievance regarding the issuance of the impugned show cause notice without resolving the earlier communications and submissions made by the Petitioner.

4. The Respondents, through their counter affidavit, highlighted the legal provisions empowering them to verify credits and initiate proceedings for wrongly availed credits. The Respondents emphasized considering the Petitioner's responses before issuing the impugned show cause notice under Section 73 of the CGST Act.

5. The examination of the Petitioner's responses and the content of the impugned show cause notice revealed detailed analysis of the CENVAT credit transactions and discrepancies, leading to the initiation of substantive proceedings under Section 73 of the Act, focusing on the recovery of the allegedly wrongly carried forward amount.

6. The judicial view acknowledged the statutory scheme followed by the Respondents, emphasizing that the earlier notices were for inquiries, while the impugned notice was a substantive show cause notice for recovery and imposition of penalties. The court found no jurisdictional error in the issuance of the impugned notice and refrained from interference at that stage.

7. Ultimately, the court dismissed the petition, leaving the Petitioner to raise its arguments and avail statutory remedies before the Respondents. The judgment clarified that no opinion was expressed on the merits of the case, maintaining neutrality on the parties' contentions.

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