2021 (11) TMI 646 - HC - GST

Vires of section 16(2)(c) of the Central Goods and Services Tax Act, 2017 - explanation has been called for from the petitioners as to why action, as proposed may not be taken - HELD THAT - Issue notice to the respondents, returnable on January 11, 2022. Since the vires of section 16(2)(c) of the CGST Act is under challenge, the petitioners are directed to put the Attorney General for the Union of India on notice. Pendency of the writ petition shall, however, not preclude the respondent no.1 to take the proceedings arising out of the impugned show cause notice to its logical conclusion; however, any order passed in such proceedings shall be subject to and abide by the result of this writ petition.

Summary

Issues:
Challenge to show cause-cum-demand notice dated July 29, 2021; Challenge to the vires of section 16(2)(c) of the Central Goods and Services Tax Act, 2017.

Analysis:
The High Court of Bombay, comprising Chief Justice Dipankar Datta and Justice M. S. Karnik, heard a writ petition challenging a show cause-cum-demand notice issued by the Deputy Commissioner CGST & CEX. The notice sought an explanation from the petitioners regarding proposed actions. The petitioners also contested the validity of section 16(2)(c) of the CGST Act. The court, after hearing the petitioners' advocate, found no immediate reason to interfere with the show cause notice, citing a Supreme Court decision. However, due to the challenge against the vires of section 16(2)(c), the court decided to issue notice to the respondents, returnable on January 11, 2022. The petitioners were directed to notify the Attorney General for the Union of India due to the challenge to the specific section of the CGST Act.

The court clarified that the pendency of the writ petition would not prevent the respondent from continuing the proceedings related to the impugned show cause notice. Any orders resulting from such proceedings would be subject to the outcome of the writ petition. The petitioners were advised that they could participate in the proceedings without compromising their rights and contentions in the ongoing writ petition. The court's decision to issue notice to the respondents and involve the Attorney General indicated a significant step towards addressing the challenge to the vires of the specific section of the CGST Act. The court's approach of allowing parallel proceedings while ensuring that the outcome of the writ petition would impact any orders passed demonstrated a balanced consideration of the legal issues involved in the case.