2024 (8) TMI 1308 - HC - GST

Juristion of carrying out impugned show cause notice proceedings - scope for seizure or confiscation of cash - HELD THAT - The Court is of the view that there is no merits in the present Writ Petition and this Writ Petition is liable to be dismissed. The petitioner cannot scuttle the Show Cause proceedings initiated under the provisions of the respective GST enactments, merely because, the petitioner has secured favourable Order from the Tribunal in Naya Carnation Fireworks, Sri Cornation Fireworks Pvt. Ltd., Bee Cee Fireworks Industries, The Coronation Fireworks Factory, K. Balaji, K. Jeyakumar, A.R. Arumugarajan and B. Saravanan Versus Commissioner of GST Central Excise, Madurai 2024 (5) TMI 1109 - CESTAT CHENNAI . Further, the impugned show cause notice has also only sought to appropriate the amount that was seized on 08.10.2020 from the custody of the petitioner's partner. That apart, the amount, that was seized on 08.10.2020, can be appropriated only towards the tax liability, if any of the petitioner under the provisions of the respective GST enactments and it is for the petitioner to explain as to why the aforesaid amount should not be appropriated towards the tax liability of the petitioner. The petitioner is directed to participate in the impugned show cause notice proceeding by filing proper reply within a period of 30 days from the date of receipt of a copy of this order - Petition dismissed.

Summary

Issues:
Challenging show cause notice under GST for assessment period, seizure of cash, relevance of seized cash, jurisdiction of impugned show cause notice, scope of seizure of cash under GST enactments, clarification by Commissioner (GST) Investigation, Department filing statutory appeal, proposal for appropriation of seized amount, entitlement to refund, scuttling of show cause proceedings, appropriating seized amount towards tax liability.

Analysis:
The petitioner challenged show cause notice Nos.106, 107, 108/2023 GST issued for the assessment period from July 2017 to October 2020. The notice was based on a cash seizure of Rs. 1,82,25,000 from one of the petitioner's partners, which was linked to Central Exercise Act and GST Act provisions. Subsequent show cause notices and orders were issued, leading to an appeal before the Tribunal, which ruled in favor of the petitioner and ordered the seized cash to be refunded. However, a backdated show cause notice dated 28.12.2023 was issued after the Tribunal's decision, raising concerns about jurisdiction and intent to defeat the petitioner's rights.

The petitioner argued that there is no scope for seizure or confiscation of cash under GST enactments, citing precedents. They emphasized that the seized amount should be refunded as per the Tribunal's order. The petitioner also referred to a clarification by the Commissioner (GST) Investigation regarding voluntary tax payments during proceedings. The petitioner contended that the impugned show cause notice was without jurisdiction and aimed at circumventing the Tribunal's decision.

On the other hand, the respondent highlighted that the show cause notice did not propose confiscating the seized cash but intended to appropriate it towards tax liability. The respondent asserted that the petitioner would be entitled to a refund if the demand in the notice is dropped. The Department was in the process of filing a statutory appeal against the Tribunal's decision, indicating ongoing legal action.

The Court concluded that the petitioner cannot obstruct the show cause proceedings under GST enactments despite the Tribunal's favorable order. It directed the petitioner to participate in the notice proceedings and provide a reply within 30 days. The Court emphasized that the seized amount could only be appropriated towards the petitioner's tax liability under GST provisions. The judgment dismissed the writ petition, with the directive for the respondent to consider and pass orders on merits, ensuring a refund if the petitioner succeeds.