2022 (3) TMI 166 - HC - GST

Maintainability of petition - Jurisdiction of Proper Officer to invoke section 74 of the CGST/OGST Act - input tax credit - HELD THAT - Since the Petitioner has come up before this Court without raising any objection or filing any reply to the said Show Cause Notice we are not inclined to entertain the writ petition at this stage. The contentions of the Petitioner are in the nature of disputed fact which requires adjudication of fact on the basis of documents available in record and evidence to be adduced by the Petitioner during the course of adjudication process before the Proper Officer. It may be pertinent to have reference to the judgment by the Hon ble Supreme Court in India in the case of UNION OF INDIA OTHERS VERSUS COASTAL CONTAINER TRANSPORTERS ASSOCIATION OTHERS 2019 (2) TMI 1497 - SUPREME COURT . In the said case the case of Respondents was that Show Cause Notice issued was contrary to circular issued by the CBEC. Hon ble Court observed that entertaining writ petition is not proper when alternative remedy under statute is available. The Hon ble Court in the said judgment therefore observed that the Respondents therein ought to have responded to the Show Cause Notice by placing material in support of their stand but at the same time there was no reason to approach the High Court questioning the very Show Cause Notices. During the course of hearing the Petitioner admitted that though he had adjusted its tax liability against input tax credit available in the electronic credit ledger he has not paid interest against such delayed adjustment/payment - the disputed facts arising in the matter are required to be adjudicated by the Proper Officer. The Petitioner is at liberty to file his Show Cause reply and raise objections including jurisdictional issue. Petition disposed off.

Summary

Issues: Jurisdiction of Proper Officer under CGST/OGST Act, Proper response to Show Cause Notice, Alternative remedy under statute

Jurisdiction of Proper Officer under CGST/OGST Act:
The petitioner challenged the Show Cause Notice issued by the Opposite Party No. 1 under Section 74 of the CGST/OGST Act, arguing that the Proper Officer lacked jurisdiction to invoke the said provision. The petitioner contended that instructions appended to GSTR-9 cannot override statutory provisions. The counsel for the Opposite Party stated that the petitioner failed to discharge tax liability despite receiving TDS and filing GST returns as 'Nil'. The Proper Officer had determined the tax short paid, interest, and penalty, providing an opportunity to rebut in the notice. The court noted that the petitioner's contentions were disputed facts requiring adjudication based on available documents and evidence during the adjudication process before the Proper Officer.

Proper response to Show Cause Notice:
The court referenced a judgment by the Hon'ble Supreme Court regarding the importance of responding to Show Cause Notices and utilizing alternative remedies under the statute. The petitioner admitted to adjusting tax liability against input tax credit but not paying interest for delayed adjustment/payment. The court emphasized that disputed facts needed adjudication by the Proper Officer, allowing the petitioner to file a Show Cause reply and raise objections, including jurisdictional issues. The court directed the petitioner to file its reply/objection within 15 days, enabling the Proper Officer to address each objection and issue a reasoned order.

Alternative remedy under statute:
The court highlighted the importance of utilizing alternative remedies under the statute rather than approaching the High Court directly to challenge Show Cause Notices. It emphasized the need for respondents to respond to Show Cause Notices with supporting material before seeking judicial intervention. The court disposed of the writ petition, emphasizing the significance of following proper procedures and utilizing available statutory remedies before seeking judicial intervention.