2023 (11) TMI 710 - HC - GST

Validity of Show Cause Notice (SCN) - Clandestine supplies of Pan Masala without payment of GST and Cess - Evasion of duty - it is alleged that notice issued with oblique motive, based on incorrect facts, contains numerous inaccuracies - HELD THAT - Having perused the records particularly to the contents of the Show Cause Notice impugned, prima-facie, it is found that the allegations leveled against the petitioners have substance. It is not required to venture into the correctness or otherwise of the allegations set out in the impugned Show Cause Notice as the same would involve fact appreciation and with respect to the same the petitioners have adequate statutory remedies available by filing appropriate objections to the Show Cause Notice and lead defence evidence controverting the allegations. Suffice is to note that there is no inherent lack of jurisdiction of the Competent Authority to issue the impugned Show Cause Notice. The argument raised by learned counsel for the petitioner that the Show Cause Notice has been issued with a premeditated mind does not merit consideration at this stage of the proceedings. Once allegations of infraction of law arise the adjudication proceedings may not be interjected in exercise of extra ordinary jurisdiction conferred under Article 226 of the Constitution of India particularly in view of the fact that reference made to other facts narrated in the Show Cause Notice would also remain to be examined in the adjudication proceedings. Writ petition dismissed.

Summary

Issues involved:
The issues involved in this case are the challenge to a Demand-cum-Show Cause Notice dated 27.04.2023 regarding alleged violations of the provisions of CGST Act, UPGST Act, IGST Act, and GST (Compensation to States) Act, pertaining to clandestine supplies of Pan Masala without payment of GST and Cess, unpaid GST Compensation Cess, unaccounted seized cash, and potential prosecution proceedings.

Details of the Judgment:

Violation of CGST, UPGST, and IGST Acts:
The writ petition challenged a Show Cause Notice alleging evasion of CGST, UPGST, and IGST liabilities due to clandestine supplies of Pan Masala. The petitioners argued that the notice was issued with incorrect facts and oblique motives, contending that the trucks were not intercepted but were being loaded at the factory premises. They claimed to have paid applicable GST on the goods. The Court found the allegations in the notice to have substance but refrained from delving into the correctness of the allegations at that stage, stating that the petitioners have statutory remedies to challenge the notice by filing objections and presenting defense evidence.

Validity of Show Cause Notice:
The Court noted that the Show Cause Notice was based on investigations and scrutiny of documents, alleging tax evasion by the petitioners. The respondents argued that the notice was issued after due consideration and that the final determination would be made after considering the petitioner's reply. They contended that the petitioner could raise factual issues at the appropriate stage. The Court declined to interfere under Article 226 of the Constitution, stating that the petitioners have the option to challenge the notice through statutory remedies.

Conclusion:
The Court dismissed the writ petition, emphasizing that the petitioners can avail themselves of the remedies provided by law to challenge the Show Cause Notice. It clarified that the dismissal did not prejudge the defense that the petitioners may present during the adjudication process. The Court held that the case law cited by the petitioners was not applicable to the current situation, and the statutory remedies should be pursued for redressal.

This summary provides a detailed overview of the judgment, highlighting the issues involved, arguments presented by both parties, and the Court's decision to dismiss the writ petition while emphasizing the availability of statutory remedies for the petitioners.