2022 (7) TMI 226 - HC - GST

Validity of SCN - applicability and binding nature of circular - rate of GST on various goods - in the circular dated 9-8-18 various issues on applicability of GST were clarified - HELD THAT - The petitioner has challenged the impugned show cause notice on the strength of circular No.52/26/2018-GST, dated 09.08.2018 of the Government of India, Ministry of Finance (Department of Revenue), Central Board of Indirect Taxes and Customs, New Delhi. The impugned show cause notice, which has been issued by the 4th respondent under Sections 73 and 74 of the GST Act, 2017 cannot be said to be without jurisdiction merely because on merits there is a clarification of CBIC Circular No.52/26/2018-GST dated 09.08.2018. This circular is binding on the authorities as per the decision of the Hon'ble Supreme Court in the case of COLLECTOR OF C. EX., VADODARA VERSUS DHIREN CHEMICAL INDUSTRIES 2001 (12) TMI 3 - SUPREME COURT . These circulars are however not binding on the Courts as per the decision of the Hon'ble Supreme Court in the case of COMMISSIONER OF CENTRAL EXCISE, BOLPUR VERSUS M/S RATAN MELTING WIRE INDUSTRIES 2008 (10) TMI 5 - SUPREME COURT . Thus, it is true that the circular issued by the CBIC are binding on the authorities, however whether the circular is applicable or not is a matter, which has to be considered on merits of the facts and circumstances of the case. This writ petition by directing the petitioner to file a reply before the 4th respondent to the impugned show cause notice within a period of 60 days from the date of receipt of a copy of this order - Petition disposed off.

Summary

Issues:
Challenge to show cause notice based on circular No.52/26/2018-GST - Jurisdiction of the impugned notice - Applicability and interpretation of circular - Alternative remedy available to petitioner.

Analysis:
The petitioner challenged a show cause notice dated 15.12.2020 from the 4th respondent, arguing it contradicted circular No.52/26/2018-GST, which clarified GST rates for bus body building activities. The petitioner contended that as per the circular, they were not liable to pay tax at the proposed 28% rate. The respondents, however, claimed the petitioner could address the issue through an alternate remedy before the 4th respondent, citing a Supreme Court decision in support.

The High Court examined the arguments presented by both parties. It noted that while circulars from the Central Board of Indirect Taxes and Customs (CBIC) are binding on authorities, their applicability must be assessed based on the specific circumstances of each case. The Court emphasized that circulars are not binding on the Courts, citing relevant Supreme Court decisions.

Considering the binding nature of the circular in question, the Court directed the petitioner to respond to the show cause notice within 60 days and mandated the 4th respondent to make a decision within 30 days thereafter, taking into account the circular's applicability to the case. The Court stressed that the petitioner must be given a hearing before any final decision is made.

Ultimately, the Court disposed of the writ petition based on the above observations, without imposing any costs. The connected miscellaneous petition was also closed as a result of the judgment.