2024 (11) TMI 107 - HC - GST

Refund of integrated taxes sanctioned on export of goods for the period FY 2018-19 to 2020-21 - time limitation - challenge to notice on the ground of limitation prescribed under sub- section (10) of Section 73 of the CGST Act - HELD THAT - Rule 86(4B) of the CGST Rules was introduced vide Notification No. 14/2022-Central Tax dated 05.07.2022 allowing recredit of input tax credit pertaining to the amount paid back for contravention of Rule 96 of the CGST Rules. The respondent No. 2 issued notice initiating independent investigation against the petitioner in relation to the refund of integrated tax for the period in question. The first show-cause notice was issued on 03.04.2024 in respect of the Maharashtra registration and thereafter the subsequent impugned notice dated 20.08.2024 in respect of Madhya Pradesh registration has been issued. Moreso, in the entire petition, petitioner has not disclosed the actual date of refund of integrated tax. There is a separate period of limitation of three years from the date of erroneous refund. Even otherwise, in this case the Special Intelligence and Investigation Branch started investigation against the petitioner in respect of import and export for the FY 2017-18 to 2020-2021 and after scrutinizing all the documents, the show-cause notice has been issued to the petitioner. Therefore, it cannot be said that it is a time barred notice. There are no reason for interference in the impugned show-cause notice dated 20.08.2024 and accordingly, the petition stands dismissed as not maintainable.

Summary

Issues:
Challenge to show-cause notice under Article 226 of the Constitution regarding alleged violation of CGST Act and Rules, limitation period under Section 73(10) of CGST Act, jurisdiction of the court, maintainability of the petition, wrongful refund of IGST, issuance of impugned notice, compliance with CGST Rules.

Analysis:
The petitioner, a private limited company engaged in research and development, challenged a show-cause notice issued under Section 73 of the CGST Act for alleged violation of Rule 96(10) of the CGST Rules related to IGST refunds on exports. The notice demanded the deposit of a significant amount with interest and penalty. The petitioner contended that the notice was time-barred as per the limitation period prescribed under Section 73(10) of the CGST Act, which requires the order to be issued within three years from the due date of the annual return or from the date of erroneous refund.

The petitioner argued that the notice was issued beyond the prescribed limitation period and should be considered without jurisdiction. The petitioner also raised the issue of the judgment in Cosmo Films Limited vs. Union of India not being considered before issuing the notice. However, the respondent argued that the petition under Article 226 was not maintainable, citing precedents where statutory remedies were bypassed. The respondent highlighted that statutory remedies and appeals were available to the petitioner.

The court examined the limitation period under Section 73(10) of the CGST Act and the facts of the case. It noted that the petitioner had stopped availing the exemption benefit from a specific date, but the notice alleged wrongful refund of IGST from an earlier period. The court observed that the petitioner only refunded the tax amount after receiving a notice, and a subsequent investigation led to the impugned notice being issued. The court found no reason to interfere with the notice, dismissing the petition as not maintainable.

In conclusion, the court upheld the impugned show-cause notice dated 20.08.2024, emphasizing the importance of compliance with the CGST Act and Rules. The judgment clarified the application of the limitation period and the necessity for timely action in response to tax-related matters to avoid legal consequences.