2025 (1) TMI 883 - HC - GST

Challenge to SCN on the premise that jurisdictional fact necessary for invoking Section 122 (1A) of the Central Goods and Services Tax Act, 2017 does not exist - HELD THAT - To a pointed question as to if there is any provision which mandates that obtaining a statement was a condition precedent for issuance of show cause notice, the learned counsel for the petitioner was unable to point out any provision. In view thereof, it is open to the petitioner to file their objections to the notice within a period of 4 weeks from the date of receipt of a copy of this order. Petition dismissed.

Summary

1. ISSUES PRESENTED and CONSIDERED

The core legal questions considered in this judgment are:

• Whether the jurisdictional fact necessary for invoking Section 122(1A) of the Central Goods and Services Tax Act, 2017 (CGST Act) exists in the present case.
• Whether the writ petition challenging the show cause notice is premature and should be entertained at this stage.
• Whether the issuance of the show cause notice without obtaining a statement from the petitioner is valid under the CGST Act.

2. ISSUE-WISE DETAILED ANALYSIS

Issue 1: Jurisdictional Fact for Invoking Section 122(1A) of CGST Act

• Relevant Legal Framework and Precedents: Section 122(1A) of the CGST Act provides for penalties on individuals who retain the benefit of certain transactions and at whose instance such transactions are conducted. The section requires a jurisdictional fact to establish that the petitioner retained the benefit of a transaction covered under specific clauses.
• Court's Interpretation and Reasoning: The court noted that the petitioner's argument was based on the absence of a jurisdictional fact necessary for invoking Section 122(1A). However, the court did not delve into the merits of this argument as it was premature to do so at the stage of a show cause notice.
• Key Evidence and Findings: The respondents pointed to findings in the impugned notice that allegedly set out the involvement of the petitioner, including statements from key individuals involved in the transactions.
• Application of Law to Facts: The court did not apply the law to the facts in detail, as it determined that the writ petition was premature and that the petitioner should respond to the show cause notice through the appropriate channels.
• Treatment of Competing Arguments: The court acknowledged the petitioner's argument regarding jurisdictional facts but emphasized the premature nature of the writ petition.
• Conclusions: The court concluded that the writ petition should not be entertained at this stage, allowing the petitioner to file objections to the show cause notice.

Issue 2: Premature Nature of the Writ Petition

• Relevant Legal Framework and Precedents: The court referred to several Supreme Court judgments emphasizing that writ petitions should not ordinarily be entertained at the stage of show cause notices, as alternative remedies are available.
• Court's Interpretation and Reasoning: The court reasoned that the writ petition was premature and that the petitioner should respond to the show cause notice and exhaust alternative remedies before approaching the court.
• Key Evidence and Findings: The court relied on precedents that discourage the use of writ jurisdiction at the stage of show cause notices.
• Application of Law to Facts: The court applied the principle that writ jurisdiction is discretionary and should not be used to quash show cause notices unless there is a clear lack of jurisdiction.
• Treatment of Competing Arguments: The court addressed the petitioner's argument about the premature nature of the writ petition by emphasizing the availability of alternative remedies.
• Conclusions: The court concluded that the writ petition was premature and dismissed it, directing the petitioner to file objections to the show cause notice.

Issue 3: Validity of the Show Cause Notice Without a Statement

• Relevant Legal Framework and Precedents: The petitioner argued that the show cause notice was issued without obtaining a statement, but could not point to any legal provision mandating such a requirement.
• Court's Interpretation and Reasoning: The court noted the absence of any legal provision requiring a statement before issuing a show cause notice and found the petitioner's argument unsubstantiated.
• Key Evidence and Findings: The court found no legal basis for the petitioner's claim that a statement was necessary before issuing the notice.
• Application of Law to Facts: The court determined that the issuance of the show cause notice was procedurally valid under the CGST Act.
• Treatment of Competing Arguments: The court addressed the petitioner's argument by highlighting the lack of a legal requirement for obtaining a statement before issuing the notice.
• Conclusions: The court concluded that the show cause notice was validly issued and dismissed the petitioner's argument.

3. SIGNIFICANT HOLDINGS

• Preserve Verbatim Quotes of Crucial Legal Reasoning: "Writ jurisdiction is discretionary jurisdiction and hence such discretion under Article 226 should not ordinarily be exercised by quashing a show-cause notice or charge-sheet."
• Core Principles Established: The court established that writ petitions challenging show cause notices are generally premature and should not be entertained unless there is a clear lack of jurisdiction.
• Final Determinations on Each Issue: The court dismissed the writ petition as premature, allowing the petitioner to file objections to the show cause notice and directing the respondents to consider such objections in accordance with the law.