2022 (4) TMI 747 - HC - GST

Validity of Show cause notice issued u/s 74 - Erroneous Refund - limitation placed by the Legislature on the powers exercisable under Section 74(1) of the OGST Act, or not - HELD THAT - The Court notices that there is no limitation placed by the Legislature on the powers exercisable under Section 74(1) of the OGST Act. In particular there is no indication that an order that is otherwise appealable under Section 107 of the OGST Act cannot be sought to be revisited under Section 74(1) of the OGST Act - Section 74(1) of the OGST Act does not appear to make any distinction between those refund orders that have been passed without an adjudication and those have been passed after an adjudication. Also, there is nothing in Section 74 (1) of the OGST act to indicate that an order of refund granted after an adjudication cannot be sought to be reopened thereunder. The Court is not prepared to accept the plea of the Petitioner that the impugned notice dated 1st October, 2021 is without jurisdiction. However, the Court clarifies that it has expressed no opinion on the other contentions of the Petitioner on merits which it may advance in response to the impugned SCN. The writ petition is disposed of.

Summary

Issues: Challenge to Show Cause Notice under OGST Act

Analysis:
1. Challenge to Show Cause Notice: The petitioner challenged a Show Cause Notice dated 1st October, 2021 issued by the Joint Commissioner of CT & GST under Section 74 of the Odisha Goods and Sales Tax Act, 2017 (OGST Act).

2. Background and Refund Order: The petitioner had initially applied for a refund, and after adjudication, a refund order in favor of the petitioner was passed by the same authority, the Joint Commissioner of CT & GST, Rourkela-II, on 6th November, 2018, amounting to ?75 lakhs. Subsequently, various notices were issued under different sections of the OGST Act.

3. Contentions of the Petitioner: The petitioner argued that the department could have filed an appeal under Section 107(1) of the OGST Act against the order of erroneous refund. However, as the department missed the time limit for appeal, it cannot seek to reopen the refund through Section 74 of the OGST Act. The petitioner highlighted provisos 1 and 2 to Section 107(11) of the OGST Act, emphasizing the need for a reasonable opportunity to show cause against any proposed order.

4. Department's Position: On the other hand, the Department, represented by learned ASC, drew attention to Section 74(1) of the OGST Act, which empowers the proper officer to serve notice on a person chargeable with tax not paid, short paid, or erroneously refunded, or who wrongly availed or utilized input tax credit due to fraud or willful misstatement.

5. Court's Decision: The Court noted that there is no statutory limitation under the OGST Act on the powers exercisable under Section 74(1). It observed that the provision does not distinguish between refund orders passed with or without adjudication. The Court declined the petitioner's plea that the impugned notice was without jurisdiction, leaving the petitioner the opportunity to present other contentions in response to the Show Cause Notice.

6. Disposal of the Writ Petition: The Court disposed of the writ petition, allowing the petitioner to raise additional contentions in response to the Show Cause Notice, which would be examined and decided by the Department in accordance with the law.

7. Conclusion: The judgment upheld the validity of the Show Cause Notice issued under Section 74 of the OGST Act, emphasizing the importance of allowing the petitioner to present further contentions in response to the notice for due consideration by the Department.