2025 (2) TMI 355 - HC - GST

Seeking to quash a letter and to restrain the Respondents from proceeding with a SCN - Whether Petitioner should have paid GST on the supply of textbooks which are typically tax-exempt as they were part of a composite supply with platform solution services? - HELD THAT - This Writ Petition is disposed off by directing that when Respondent No. 3 adjudicates the Show Cause Notice he shall also take into account the contentions of the Petitioner regarding the non-availment of the ITC and what would be the effect thereto. In other words the adjudicating authority shall also at the time of adjudicating the Show Cause Notice also decide whether the Petitioner is entitled to ITC if they are held liable to pay tax as alleged in the Show Cause Notice. Since the time period to pass an Order on the Show Cause Notice expires on 5th February 2025 the time to pass the Order extended by a further period of eight weeks from today. Before passing the Order Respondent No. 3 on the limited aspect of Input Tax Credit shall also give a hearing to the Petitioner and allow them to file the necessary documents. Petition disposed off.

Summary

**Summary of the Judgement:**The Bombay High Court, comprising Justices B.P. Colabawalla and Firdosh P. Pooniwalla, addressed a Writ Petition filed by the Petitioner seeking to quash a letter dated 2nd September 2024 and to restrain the Respondents from proceeding with a Show Cause Notice dated 11th July 2024. The core issue revolves around the allegation that the Petitioner should have paid GST on the supply of textbooks, which are typically tax-exempt, as they were part of a composite supply with platform solution services, the latter being the principal supply.The Petitioner contended that they treated the sale of books as an exempt supply under GST Law, reversing or not availing Input Tax Credit (ITC) accordingly. This factual position was not acknowledged in the Show Cause Notice. Respondent No. 2, in response, indicated that any submissions regarding the Show Cause Notice should be directed to the adjudicating authority, Respondent No. 3.The Court directed that Respondent No. 3 must consider the Petitioner's arguments about ITC non-availment during the adjudication of the Show Cause Notice. The adjudicating authority is tasked with determining the Petitioner's entitlement to ITC if they are found liable for tax as alleged. The deadline for passing an Order on the Show Cause Notice is extended by eight weeks, with a mandate for Respondent No. 3 to provide a hearing to the Petitioner on the ITC issue and allow them to submit necessary documents.All contentions on merits remain open for argument before Respondent No. 3. The Writ Petition is disposed of with no order as to costs, and the order will be digitally signed and communicated through fax or email.