2024 (12) TMI 1492 - HC - GST

Maintainability of petition - availability of alternative remedy - Challenge to order issued u/s 73 of the Central Goods and Services Tax/State Goods and Services Tax Acts, 2017 - HELD THAT - The petitioner is entitled to succeed. A perusal of Ext.P7 show cause notice will indicate that the only issue on which the show cause notice was issued was a mismatch between GSTR-1 and GSTR-3B for the period in question. However, Ext.P1 order proceeds to record findings on other issues as well. That apart, a reading of Ext.P1 does not indicate that the replies submitted by the petitioner have been duly considered by the authority. After extracting the details of the notice issued to the petitioner, the officer proceeds to extract the provisions of Section 16 of the CGST/SGST Acts and holds that as per Section 16(2)(a) of the CGST/SGST Acts, the petitioner shall be entitled to input tax credit only if he is in possession of a tax invoice or debit note issued by the supplier registered under the CGSG/SGST Acts and that the burden of proving the claim for input tax credit will always lie on the person claiming the input tax credit. Conclusion - Ext.P1 is quashed due to its procedural deficiencies. The writ petition is allowed.

1. ISSUES PRESENTED and CONSIDERED

The core legal issues considered in this judgment are:

Whether the Ext.P1 order issued under Section 73 of the CGST/SGST Acts for the period between April 2018 and March 2019 was valid, given that it included findings on issues not covered by the show cause notice (Ext.P7).
Whether the petitioner's replies to the scrutiny notices were adequately considered in the Ext.P1 order.
Whether the petitioner should have availed statutory remedies instead of filing a writ petition under Article 226 of the Constitution of India.

2. ISSUE-WISE DETAILED ANALYSIS

Issue 1: Validity of Ext.P1 Order

Relevant Legal Framework and Precedents: The order was issued under Section 73 of the CGST/SGST Acts, which pertains to the determination of tax not paid or short paid or erroneously refunded.
Court's Interpretation and Reasoning: The court noted that Ext.P1 order included findings on issues beyond the mismatch between GSTR-1 and GSTR-3B returns, which was the sole issue in the show cause notice (Ext.P7).
Key Evidence and Findings: The court found that the Ext.P1 order did not consider the petitioner's replies adequately and included issues not covered in Ext.P7.
Application of Law to Facts: The court applied Section 16 of the CGST/SGST Acts, emphasizing the necessity for the petitioner to possess a tax invoice or debit note to claim input tax credit.
Treatment of Competing Arguments: The petitioner argued that the order was cryptic and lacked reasoning, while the respondents contended that statutory remedies should be pursued. The court sided with the petitioner, finding the order deficient in reasoning.
Conclusions: The court concluded that Ext.P1 was invalid due to its inclusion of issues not covered in the show cause notice and inadequate consideration of the petitioner's responses.

Issue 2: Adequacy of Consideration of Petitioner's Replies

Relevant Legal Framework and Precedents: The procedural fairness in administrative orders requires that all relevant submissions by the affected party be duly considered.
Court's Interpretation and Reasoning: The court observed that Ext.P1 did not reflect a proper consideration of the petitioner's replies to the scrutiny notices.
Key Evidence and Findings: The court noted the absence of detailed reasoning in Ext.P1, indicating a lack of consideration of the petitioner's submissions.
Application of Law to Facts: The court emphasized the need for administrative orders to be reasoned and reflective of the submissions made by the parties.
Treatment of Competing Arguments: The petitioner's argument that their submissions were not considered was upheld by the court.
Conclusions: The court concluded that the order was procedurally flawed due to inadequate consideration of the petitioner's replies.

Issue 3: Appropriateness of Filing a Writ Petition

Relevant Legal Framework and Precedents: Article 226 of the Constitution of India allows for the filing of writ petitions for the enforcement of fundamental rights and other legal rights.
Court's Interpretation and Reasoning: The court found that the petitioner was justified in approaching the court under Article 226 due to the procedural deficiencies in Ext.P1.
Key Evidence and Findings: The court noted that the petitioner's grievances were not adequately addressed in the administrative process.
Application of Law to Facts: The court determined that the procedural flaws in Ext.P1 warranted judicial intervention under Article 226.
Treatment of Competing Arguments: The respondents argued for the exhaustion of statutory remedies, but the court found the procedural flaws significant enough to justify the writ petition.
Conclusions: The court concluded that the writ petition was appropriate given the circumstances.

3. SIGNIFICANT HOLDINGS

Preserve Verbatim Quotes of Crucial Legal Reasoning: "A reading of Ext.P1 suggests that the learned counsel for the petitioner is right in contending that it is a cryptic order and does not contain the reasons for finalising the liability against the petitioner."
Core Principles Established: Administrative orders must be reasoned and consider all relevant submissions by the affected party. Judicial intervention under Article 226 is justified in cases of procedural deficiencies.
Final Determinations on Each Issue: The Ext.P1 order was quashed due to its procedural deficiencies. The competent authority was directed to pass fresh orders after providing the petitioner an opportunity to be heard and addressing any additional issues with proper notice.

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