2020 (12) TMI 451 - HC - GST

Validity of SCN - petitioner-Company has challenged the SCN in the present writ petition on various grounds including that the respondents do not have jurisdiction to pass impugned detention order/notice - Section 129(3) of the CGST Act, 2017 read with Section 20 of the IGST Act, 2017 - HELD THAT - In the instant writ petition, it is apparent that by the medium of this writ petition, only a show cause notice has been challenged by the petitioner-Company. Though the petitioner- Company has filed reply to the said show cause notice, but it intends to file a detailed reply to the said show cause notice. Without expressing any opinion on the merits of the case, we deem it proper to dispose of this writ petition, at this stage, reserving liberty to the petitioner-Company to file detailed reply to the show cause notice in question, enabling the respondents to determine the tax under the GST Act. In the event of filing reply to the show cause notice by the petitioner- Company, the respondents are directed to consider the same and pass appropriate order. In the meantime, the respondents are directed not to finalize the imposition of penalty. Petition disposed off.

Issues:
1. Challenge to show cause notice under Section 129(3) of the CGST Act, 2017 read with Section 20 of the IGST Act, 2017.
2. Jurisdiction of the respondents to pass the detention order/notice.
3. Appealability of the impugned show cause notice.
4. Invocation of writ jurisdiction for challenging the show cause notice.
5. Request for direction to not determine tax under the GST Act until detailed reply is perused.
6. Consideration of machinery release due to logistic misuse if not fixed and used.

Analysis:

1. The petitioner, a Company incorporated under the Companies Act, 1956, entered into a contract to supply hydro mechanical plant and equipment for a hydroelectric project in Himachal Pradesh. The petitioner imported equipment from the Netherlands to India and transported it to the project site using three vehicles, each with a separate e-way bill. One vehicle was intercepted for carrying an e-way bill based on a delivery challan rather than a tax invoice, leading to a show cause notice challenging the detention under GST laws.

2. The petitioner challenged the show cause notice on various grounds, including questioning the jurisdiction of the respondents to issue the detention order. The respondents argued that the petition was not maintainable as the notice was appealable, and the petitioner should respond to the notice instead of invoking writ jurisdiction.

3. The Court acknowledged that the petition solely challenged the show cause notice, emphasizing the need for the petitioner to file a detailed reply. Despite the petitioner submitting a reply, they expressed the intention to provide a more comprehensive response. The Court reserved the petitioner's right to file a detailed reply and directed the respondents to consider it before determining tax liability under the GST Act.

4. While refraining from expressing an opinion on the case's merits, the Court disposed of the petition, allowing the petitioner to file a detailed reply to the show cause notice. The respondents were instructed not to finalize the imposition of penalties until the detailed reply was reviewed and appropriate orders were issued based on the response.

5. Additionally, the petitioner raised concerns about potential logistic misuse if the imported machinery remained unused. In response, the Court directed the immediate release of the machinery, subject to the satisfaction of the respondents through the deposit of a bank guarantee or other acceptable measures to prevent misuse, such as demand draft or net banking.

6. The judgment concluded by disposing of the writ petition and any pending applications, providing relief to the petitioner regarding the machinery's release and emphasizing the importance of filing a detailed reply to the show cause notice for the respondents' consideration.

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