2022 (11) TMI 918 - HC - GST

Reimbursement of tax effect on introduction of the GST Act with effect from 01.07.2017 from the Executive Engineers - Execution of works contract - discrepancy observed between the figures furnished by the petitioner-taxpayer in the returns furnished in Form GSTR-3B under Rule 61 of the GST Rules and the data made available in the web portal - Circular vide Memo No. 36116-FIN-CT1- TAX-0045-2017/F., dated 07.12.2017 - HELD THAT - The statutory provision and the legal position as set forth by this Court lead to show that the petitioner-contractor is supplier of service which is subject to levy of GST and for that matter ascertainment of liability and correct quantification of tax liability is subject-matter of adjudication by the authorities bestowed with power under the provisions of the GST Act. Going through the impugned notices dated 06.08.2022 ex facie indicates that the proper officer initiated action under Section 73 of the GST Act for adjudication of appropriate fact and determination of correct figure as there is anomaly in the data available on the WAMIS and the figures disclosed in the return furnished to the CT GST Organisation in Form GSTR-3B. This has nothing to do with disposal of representation(s) at Annexure-7 series stated to be pending before the Executive Engineer(s) which has separate cause of action, if any, inasmuch as the Executive Engineer is not the competent authority vested with power for adjudication of tax liability under the GST Act - there is little scope to show indulgence in the present matter as the petitioner is required to justify his claim made in the returns in Form GSTR-3B prescribed under Rule 61(5) of the GST Rules read with Section 39 of the GST Act vis- -vis data disclosed in WAMIS. In UNION OF INDIA VERSUS BAJAJ TEMPO LTD. 1 997 (7) TMI 137 - SUPREME COURT it is advised that the appropriate course for the assessee was to reply to the show cause notice enabling the authorities to record their findings of fact in each case and then, if necessary, the matter could be proceeded to the Tribunal and thereafter to the High Court. The petitioner, in the instant case, has the fullest opportunity to refute allegations, if any, and rebut adverse finding/observations involved in the matter, as discussed above. The petitioner may also raise legal issues as well as factual disputes before the Assessing Officer during the course of proceeding. It is possible for the petitioner to seek further time, if according to him the time given by the authority for filing the reply was required to be extended in order to enable it to collect further material. It cannot, therefore, be said that the notices dated 06.08.2022 under Section 73 are vulnerable - Considering the fact that the petitioner has ample opportunity to agitate issues before the Assessing Officer, this Court holds that entertainment of the writ petition at the stage of notice would be premature. This Court does not warrant it necessary to invoke extraordinary jurisdiction in exercise of power under Article 226 of the Constitution at the stage of Show Cause Notice - Petition dismissed.

Summary

Issues Involved:
1. Validity of Demand-cum-Show Cause Notices under GST Act.
2. Reimbursement of differential tax due to change from VAT to GST.
3. Competence of the CT&GST Officer to initiate proceedings under Section 73 of the GST Act.
4. Non-joinder and mis-joinder of necessary parties.
5. Jurisdiction of the High Court under Article 226/227 of the Constitution of India.

Issue-wise
Detailed Analysis:

1. Validity of Demand-cum-Show Cause Notices under GST Act:
The petitioner sought to quash the Demand-cum-Show Cause Notices dated 06.08.2022 issued by the CT&GST Officer, Angul Circle, for the tax periods 2017-18 and 2018-19. The notices were issued under Section 73 of the GST Act due to discrepancies between the figures furnished in Form GSTR-3B and the data available in the WORKS AND ACCOUNTS MANAGEMENT INFORMATION SYSTEM (WAMIS). The petitioner argued that these notices were ultra vires, illegal, and unconstitutional. However, the court held that the proper officer is competent to initiate proceedings under Section 73 for determining tax liability and that the notices are not invalid or vague.

2. Reimbursement of Differential Tax Due to Change from VAT to GST:
The petitioner contended that the change in tax regime from VAT to GST, effective from 01.07.2017, necessitated reimbursement of the differential tax by the contractee. The petitioner referred to guidelines issued by the Government of Odisha, which provided a modality for reimbursement. The court noted that the Revised Guidelines dated 10.12.2018 addressed this issue and required the contractor to bear all taxes, including GST. The court found that the petitioner's reliance on earlier guidelines dated 07.12.2017 was an attempt to misguide the court.

3. Competence of the CT&GST Officer to Initiate Proceedings under Section 73 of the GST Act:
The court examined whether the CT&GST Officer of Angul Circle was competent to initiate proceedings under Section 73 of the GST Act. It was held that the officer, functioning as the "proper officer," was indeed competent to initiate such proceedings based on discrepancies between the tax liability disclosed in GSTR-3B and the WAMIS data. The court emphasized that the determination of tax liability is within the domain of the proper officer, as defined under Section 2(91) of the GST Act.

4. Non-joinder and Mis-joinder of Necessary Parties:
The court found that the writ petition was incompetent due to non-joinder and mis-joinder of necessary parties. The petitioner had not impleaded the Executive Engineer of Rengali Right Canal Division No.II, Dhenkanal, against whom no relief could be asserted. Therefore, the court held that the petition lacked merit on this ground.

5. Jurisdiction of the High Court under Article 226/227 of the Constitution of India:
The court reiterated the principle of self-imposed restriction on entertaining writ petitions at the stage of show cause notices. It emphasized that the petitioner should exhaust alternative remedies available under the statutory framework before invoking the extraordinary jurisdiction of the High Court. The court cited several precedents, including the Supreme Court's decisions in Star Paper Mills Ltd. v. State of U.P. and Commissioner of Income Tax v. Chhabil Dass Agarwal, to support this principle. The court concluded that meddling at the stage of show cause notices would be premature and contrary to settled principles.

Conclusion:
The writ petition was dismissed as the court found no merit in the contentions raised by the petitioner. The court held that the proper officer was competent to initiate proceedings under Section 73 of the GST Act and that the petitioner should exhaust alternative remedies before seeking relief under Article 226 of the Constitution of India.