2023 (12) TMI 596 - HC - GST

Legality and Jurisdiction of SCN - Whether demand for GST on the annuity received by the petitioner from the National Highway Authority of India has been made in contradiction and violation of an exemption to annuity granted vide notifications dated 28.06.2017, 13.10.2017, 29.06.2017 and 09.11.2017? - HELD THAT - On perusal of the materials as placed before this Court, it is seen that the writ petitioner has come against a show cause notice issued under Section 74 (1) of the CGST Act, 2017 read with the corresponding Section of the Meghalaya State GST Act, 2017, wherein the petitioner was to show cause within 30 days as to why the stated amount of GST allegedly short paid on the annuity payment received, along with interest and penalty be not realized from it. The petitioner it appears instead of responding to the show cause have chosen to assail the same as has been discussed above. No doubt the writ petition cannot be said to be devoid of merit, but at this stage wherein final orders are yet to be passed by the respondents in the matter, and further with the submissions of the respondents that the matter is yet to be considered finally, this Court at this stage without further going into the merits, is not inclined to entertain the instant writ petition. In the circumstances therefore, this writ petition being premature, the same is disposed of with the direction that the petitioner first pursues and participates in the proceedings initiated vide the impugned show cause notice, by responding to the same and placing the facts and materials which have been placed before this Court. Petition disposed off.

Summary

Issues:
The judgment involves a challenge to a Demand cum Show Cause Notice issued under the Central Goods and Services Tax Act, 2017 and the Meghalaya Goods and Services Tax Act, 2017. The challenge is based on the legality and jurisdiction of the notice, specifically regarding the demand for GST on annuity payments received, which allegedly contradicts exemptions granted through various notifications.

Details of the Judgment:
The writ petitioner contested the Demand cum Show Cause Notice, arguing that it was illegal and lacked jurisdiction. The petitioner claimed that the demand for GST on annuity payments from the National Highway Authority of India went against exemptions granted in notifications issued on different dates. Additionally, the petitioner challenged a circular issued by a respondent and a recommendation made in a GST Council Meeting, asserting that these formed the basis for the impugned show cause notice.

The petitioner's counsel argued that despite the unjustified nature of the demand and its conflict with exemption notifications, the respondents proceeded with the show cause notice. Reference was made to a communication where the petitioner had explained the exemption of annuity from tax, making the issuance of the notice unnecessary. The counsel further cited a judgment from the Karnataka High Court to support the contention that the impugned circular was unlawful and should be set aside.

On the respondent's side, it was argued that the issue had not been predetermined, and a response to the show cause notice was still necessary despite the circular being set aside by another High Court. The respondent contended that the writ petition was premature and should not be entertained at that stage.

After considering the submissions and materials presented, the Court noted that the petitioner was required to show cause regarding the alleged GST shortfall on annuity payments within a specified period. The Court observed that instead of responding to the notice, the petitioner chose to challenge it. While acknowledging the merit in the petition, the Court deemed it premature as final orders were pending from the respondents.

Consequently, the Court disposed of the writ petition with a direction for the petitioner to first participate in the proceedings initiated by responding to the show cause notice. The respondents were instructed to accept the response if submitted within a specified timeframe and consider it according to the law. The Court closed the matter accordingly, without imposing any costs.