2025 (1) TMI 982 - HC - GST

Challenge to SCN - issuance of fake invoices without any underlying supply of goods using the GST registration of another entity for monetary benefits - conspiracy between petitioner and two other persons to dupe the Government by issuing fake invoices and arranged fake Input Tax Credit for the purpose of evading tax at some stage - HELD THAT - Since petitioner is assailing a show cause notice he has a remedy of filing an objection and invite an adjudication on merits. Even though petitioner referred to the decision of the Bombay High Court in SHANTANU SANJAY HUNDEKARI VIKAS AGARWAL YOGESH AGARWAL MAMTA GUPTA VERSUS UNION OF INDIA THROUGH SECRETARY MINISTRY OF FINANCE NEW DELHI. STATE OF MAHARASHTRA JOINT DIRECTOR DIRECTOR GENERAL OF GOODS AND SERVICE TAX INTELLIGENCE GUJARAT. THE ADDITIONAL/JOINT COMMISSIONER THANE COMMISSIONERATE 2024 (3) TMI 1277 - BOMBAY HIGH COURT the facts of the said case were totally different. In the said case an employee of a company was prosecuted against for the alleged mischief of the company. In such circumstances the High Court of Bombay interfered with the show cause notice. However facts and the instant circumstances of the present case are totally different. The extraordinary remedy of Article 226 of the Constitution of India cannot be invoked to challenge a show cause notice unless there are exceptional reasons. In the decision in UNION OF INDIA VERSUS VICCO LABORATORIES 2007 (11) TMI 21 - SUPREME COURT it was held that interference at the stage of show cause notice should be rare and not in a routine manner. It was also held that mere assertion that notice is without jurisdiction or that it is an abuse of process of law would not suffice to exercise jurisdiction. When factual adjudication is necessary interference under Article 226 of the Constitution of India is ruled out. The reasons now stated by the petitioner are all matters which can be agitated before the adjudicating authority itself. The issue requires factual adjudication as well. Conclusion - There are no reason to entertain this writ petition under Article 226 of the Constitution of India and relegate the petitioner to pursue other remedies available under law by filing an objection and inviting an order of adjudication. Petition dismissed.

Summary

In the case before the Kerala High Court, presided over by Honourable Mr. Justice Bechu Kurian Thomas, the petitioner challenged a show cause notice dated 16.10.2024, issued under Section 127 of the Central Goods and Services Tax Act, 2017, and the Kerala State Goods and Services Tax Act, 2017. The notice alleged that the petitioner had issued fake invoices without any underlying supply of goods, using another entity's GST registration for monetary benefits, and was involved in a conspiracy to issue fake invoices and arrange fake Input Tax Credit to evade tax.

The petitioner contended that Section 122(1)(a) only came into effect on 01.01.2021, and thus could not be applied retrospectively to the period from October 2019 to March 2020. Furthermore, the petitioner argued that as they were not a taxable person, the proceedings lacked legal validity.

The court noted that the petitioner had the option to file an objection to the show cause notice and pursue adjudication on the merits. The court referenced the decision in Union of India and Another vs. Vicco Laboratories [(2007) 13 SCC 270], emphasizing that interference at the stage of a show cause notice should be rare and that factual adjudication is necessary.

The court concluded that there were no exceptional reasons to invoke the extraordinary remedy under Article 226 of the Constitution of India to challenge the show cause notice. The petitioner was granted two weeks to file an objection to the notice, which would be considered in accordance with the law. The writ petition was dismissed with these observations.