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2024 (11) TMI 786 - HC - GSTEntertainability of the present petition at the stage of the show cause notice - recovery of taxes - determination of the value of the supply as per Section 15 (3) (b) of the CGST Act, 2017 - HELD THAT - In the show cause notice, a specific allegation is made on suppressing facts and misstatement regarding non-furnishing details of outward supplies under Section 37 of the CGST Act. There is also an allegation that the facts have been suppressed with the intention to evade the payment of GST. It is further stated in the show cause notice that if the investigation had not been conducted, evasion of GST would not have come to light. The respondents in the show cause notice have invoked the extended period of limitation based on the allegations of suppression of facts and misstatement with an intention to evade the payment of GST from July 2017 to March 2022. The show cause notice also deals with the onus of proof and its extent of compliance for the purpose of Section 15 (3) (b) of the CGST Act. The issue of whether there is a suppression of facts or misstatement to invoke an extended period of limitation would require a determination on the factual matter which this Court, in its extraordinary jurisdiction under Article 226 of the Constitution of India, certainly cannot enter into. The issue of shifting of onus also involves adjudication on facts - the contention of the petitioner that the show cause notice has been issued only on the ground of retrospective application of the Circular is also ill-founded. There is no challenge to the said circular in the prayer clause of the petition. The petition to challenge the show cause notice dated 2 August 2024 is dismissed. However, the petitioner is granted time up to 15 December 2024 to file its reply to the show cause notice. Respondent no. 3 to give a personal hearing to the petitioner and, after considering the petitioner's submissions, pass a reasoned and speaking order on or before 31 January 2025.
Issues: Challenge to show cause notice under Article 226 of the Constitution of India, Entertainability of petition at the stage of show cause notice, Barred by limitation, Allegations of suppression of facts and misstatement, Extended period of limitation, Compliance with conditions of CGST Act, Shifting of onus, Jurisdiction of the High Court under Article 226, Alternative and efficacious remedy, Precedent of interim order from Delhi High Court.
Analysis: The High Court of Bombay heard a petition challenging a show cause notice issued under Article 226 of the Constitution of India. The petitioner contested a notice demanding CGST, SGST, and IGST, along with interest and penalties. The respondents objected to the petition's entertainability at the show cause notice stage, arguing that the petitioner should first respond to the notice before approaching the court. The petitioner claimed the notice was time-barred and relied on a Delhi High Court decision for support. The show cause notice focused on determining the value of supplies under the CGST Act, alleging suppression of facts and misstatements to evade GST payment. The notice invoked the extended period of limitation based on these allegations. The court noted that determining suppression of facts and compliance with statutory conditions required factual adjudication beyond its jurisdiction under Article 226. The petitioner's contention regarding the retrospective application of a circular was deemed ill-founded. The court emphasized that the petitioner had an alternative and efficacious remedy available and cited precedents where writ petitions were not entertained merely on the grounds of challenging show cause notices. It highlighted that the High Court's jurisdiction under Article 226 is discretionary and subject to self-imposed limitations, emphasizing the importance of exhausting statutory remedies before approaching the court. The court dismissed the petition challenging the show cause notice but granted the petitioner time to respond to the notice. It directed the adjudicating authority to provide a personal hearing and pass a reasoned order. The court clarified that it had not expressed any opinion on the case's merits and kept all contentions open for the adjudication process. The petition was dismissed with liberty in the specified terms, and no costs were awarded.
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