2023 (11) TMI 514 - HC - GST

Wrongful availment and utilization of Input Tax Credit - issuance of invoices from the non existing firms without actual supply of goods - mandatory provision of Rule 142 (1) (a) of the CGST Rules, 2017 have not been followed - HELD THAT - It is deemed appropriate to dispose off the writ petition by requiring the petitioner to file objections to the show cause notice within a period of two weeks from today before the respondent No. 2 along with certified copy of the order of this Court. On filing of the objections within the time allowed, it is expected that the respondent No. 2 would proceed to consider the objections after giving personal hearing to the petitioner and pass appropriate orders, strictly in accordance with law within the next 15 days.

Summary

Issues involved: Challenge to show cause notice u/s 74 of CGST Act, 2017 for financial year 2018-19 and proceedings undertaken by respondents regarding issuance of invoices from non-existing firms and wrongful availment of Input Tax Credit.

Summary:

Challenge to Show Cause Notice:
The writ petition challenged the show cause notice dated 14.7.2023 issued by the respondent u/s 74 of the CGST Act, 2017 for the financial year 2018-19. The petitioner contended that the notice did not follow the mandatory provision of Rule 142(1)(a) of the CGST Rules, 2017 as it was not in the prescribed format FORM GST DRC-01. Additionally, it was argued that the notice violated the requirement of issuing the summary in FORM GST DRC-02 and details of tax interest and penalty in FORM GST DRC-01A. The petitioner also claimed denial of the right of cross-examination, leading to adverse information against them. The petitioner argued that due to these defects, the notice and the proceedings initiated were void ab initio and should be interfered with under Article 226 of the Constitution of India.

Opposition to Writ Petition:
In opposition to the writ petition, the respondent's counsel argued that the challenge was to a mere show cause notice based on adverse information regarding the utilization of Input Tax Credit without actual supply of goods by fictitious firms. The respondent contended that the petitioner could file objections in response to the notice, which would be considered by the concerned Authority. It was submitted that no interference by the Court was warranted in this matter.

Court's Decision:
After hearing both parties and examining the record, the Court decided to dispose of the writ petition by directing the petitioner to file objections to the show cause notice within two weeks before the respondent. The respondent was instructed to consider the objections, give a personal hearing to the petitioner, and pass appropriate orders within the next 15 days, strictly following the law.

This judgment emphasizes the importance of following procedural requirements in issuing show cause notices and provides the petitioner with an opportunity to respond and be heard before a decision is made by the authorities.