2022 (1) TMI 953 - HC - GST

Service of SCN - allegation that erroneous assumption that the Company concerned is engaged in providing textile services under the provisions of the Finance Act, 1994 - show-cause notices indiscriminately under the proviso to sub-section (1) of Section 73 of the Finance Act, 1994 read with Section 174 of the CGST Act, 2017 - HELD THAT - This writ application could have been rejected outright asking each of the members of the Association who are in receipt of such show-cause notice to file an appropriate reply before the authority and point out that they are not engaged in any manner in providing textile services. It would have been very easy for this Court to do so. However, the same would not have put an end to the harassment that may be caused unnecessarily to all those engaged in the business of textile processing. Let notice be issued to the respondents, returnable on 27th January, 2022. Mr. Lodha, the learned standing counsel, waives service of notice for and on behalf of the respondents Nos.3 and 4 respectively. The respondents Nos.1 and 2 respectively shall be served by RPAD as well as by E-mail.

Issues involved:
1. Alleged indiscriminate issuance of show-cause notices under the proviso to sub-section (1) of Section 73 of the Finance Act, 1994 read with Section 174 of the CGST Act, 2017 by the department of CGST and the Central Excise, Surat to textile processors in South Gujarat.
2. Lack of specification in show-cause notices regarding the type of textile services being rendered by the textile processors.
3. Concerns regarding harassment caused to textile processors and the need for clarification from the authorities.

Issue 1: Alleged indiscriminate issuance of show-cause notices
The writ application was filed by an Association of Textile Processors in South Gujarat, alleging that show-cause notices were being issued indiscriminately by the CGST and Central Excise department. The Association claimed that the notices were based on an erroneous assumption that the textile processors were engaged in providing textile services under the Finance Act, 1994. The counsel for the writ applicants argued that the members of the Association were not involved in providing textile services. The Court acknowledged that rejecting the application and asking individual members to respond to the notices could have been an option. However, to prevent unnecessary harassment to textile processors, the Court decided to seek clarification from the authorities on how they determined that the concerned textile processors were providing textile services.

Issue 2: Lack of specification in show-cause notices
The Court highlighted the importance of specificity in show-cause notices issued to textile processors. The counsel representing the writ applicants emphasized that if the authorities claim that the textile processors are providing textile services, they should specify the type of services being rendered in the notices. This lack of clarity in the notices raised concerns about the potential misunderstanding and misrepresentation of the nature of services provided by the textile processors. The Court aimed to address this issue by directing the authorities to provide explanations regarding how they identified the textile processors as providers of textile services.

Issue 3: Concerns regarding harassment and need for clarification
In response to the grievances raised by the Association of Textile Processors, the Court took proactive measures to address the potential harassment faced by the textile processors. By issuing notice to the respondents and seeking clarification on the basis for issuing show-cause notices, the Court aimed to ensure a fair and transparent process. The Court requested the standing counsel to assist in expeditiously resolving the matter and emphasized the importance of effective disposal to prevent unnecessary hardships to those engaged in the textile processing business. This approach demonstrated the Court's commitment to protecting the rights and interests of the textile processors in South Gujarat.

This detailed analysis of the judgment provides insights into the issues raised by the Association of Textile Processors and the Court's response in seeking clarification from the authorities to address the concerns regarding the indiscriminate issuance of show-cause notices and the lack of specificity in identifying textile services provided by the processors.

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