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TMI Blog2020 (7) TMI 24X X X X Extracts X X X X X X X X Extracts X X X X ..... Appearance: MR.AVINASH PODDAR(9761) for the Petitioner(s) No. 1 MS MANISHA LAVKUMAR SHAH, GOVERNMENT PLEADER WITH MR DHARMESH DEVNANI, AGP for the Respondent(s) No. 1,2,3,4 ORAL ORDER (PER : HONOURABLE MR. JUSTICE J.B.PARDIWALA) 1. By this writ application under Article 226 of the Constitution of India, the writ applicant, a proprietary concern through its proprietor, has prayed for the following reliefs: (a) Quash and set aside the show cause notice in Form GST DRC 01 dated 30.11.2019 at Annexure A to this petition. (b) declare the Rule 142(1)(a) of CGST/GGST Rules, being ultra vires and dehors the Act and violative of Articles 14 and 19 (1) (g) of the Constitution of India, to the extent it says notice issued under section 122. (c) Pending the admission, hearing and final disposal of this petition, (i) Proceeding and Adjudication of impugned show cause notice at Annexure A to this petition to be stayed; and (ii) No coercive action to be taken against the petitioners; (d) Grant ad interim reliefs in terms of prayers above; (e) Any other and further relief deemed just and proper be granted in the interest of just ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... long with the notice issued under Section 52 or Section 73 or Section 74 or Section 76 or Section 122 or Section 123 or Section 124 or Section 125 or Section 127 or Section 129 or Section 130 of the GST Act, 2017. According to the learned counsel, as Section 122 of the Act, 2017 does not contemplate issue of any show cause notice, the Rule 142(1)(a) travels beyond the provisions of the Act. In such circumstances, according to the learned counsel, Rule 142(1)(a) deserves to be declared as ultra vires being in excessive delegation of the powers. 10. In such circumstances referred to above, Mr. Poddar, the learned counsel prays that there being merit in his writ application, the same may be allowed and the reliefs prayed for in the writ application may be granted. ● SUBMISSIONS ON BEHALF OF THE STATE: 11. Ms. Manisha Lavkumar Shah, the learned Government Pleader assisted by Mr. Dharmesh Devnani, the learned A.G.P. appearing for the State has vehemently opposed this writ application. According to Ms. Shah, the writ application seeking to question the legality and validity of a show cause notice is not maintainable because it cannot be said in the present case that th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... v) fails to deduct the tax in accordance with provisions of sub section (1) of section 51 or deducts an amount which is actually less than the amount required to be deducted under the said sub section, or where he fails to pay to the Government under sub section (2) there of, the amount deducted as tax; (vi) fails to collect tax in accordance with the provisions of the sub -section (1) of Section 52, or collects an amount which is less than the amount required to be collected under the said sub section or where he fails to pay to the Government the amount collected as tax under sub section (3) of section 52 (vii) take or utilizes of input tax credit without actual receipt of goods or services or both either fully or partially, in contravention of the provisions of this Act or the rules made thereunder; (viii) Fraudulently obtains refund of tax under this act; (ix) take or distribute input tax credit in contravention of section 20, or rules made there under (x) falsifies or substitute financial records or produce fake accounts or documents or furnishes any false information or return with an intention to evade payment of tax under this Act; (xi) is liab ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... utilised input tax credit, requiring him to show cause as to why he should not pay the amount specified in the notice along with interest payable thereon under section 50 and a penalty equivalent to the tax specified in the notice. (2) The proper officer shall issue the notice under sub section (1) at least six months prior to the time limit specified in sub section (10) for issuance of order. (3) Where a notice has been issued for any period under sub section (1), the proper officer may serve a statement, containing the details of tax not paid or short paid or erroneously refunded or input tax credit wrongly availed or utilised for such periods other than those covered under subsection (1), on the person chargeable with tax. (4) The service of statement under sub section (3) shall be deemed to be service of notice under sub section (1) of section 73, subject to the condition that the grounds relied upon in the said statement, except the ground of fraud, or any wilful misstatement or suppression of facts to evade tax, for periods other than those covered under sub section (1) are the same as are mentioned in the earlier notice. (5) The person chargeable with tax ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n have been concluded under section 73 or section 74, the proceedings against all the persons liable to pay penalty under sections 122, 125, 129 and 130 are deemed to be concluded. Explanation 2. For the purposes of this Act, the expression suppression shall mean non declaration of facts or information which a taxable person is required to declare in the return, statement, report or any other document furnished under this Act or the rules made thereunder, or failure to furnish any information on being asked for, in writing, by the proper officer. 17. Section 164 of the Act, 2017 reads thus; Power of the Government to make Rules 164. (1) The Government may, on the recommendations of the Council, by notification, make rules for carrying out the provisions of this Act. (2) Without prejudice to the generality of the provisions of sub section (1), the Government may make rules for all or any of the matters which by this Act are required to be, or may be, prescribed or in respect of which provisions are to be or may be made by rules. (3) The power to make rules conferred by this section shall include the power to give retrospective effect to the rul ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the Rules. 20. The scope of judicial review, against the show cause notice, is required to be dealt with first. In the case of Standard Chartered Bank and others vs. Directorate of Enforcement and others reported in AIR 2006 SC 1301 , it is held that ordinarily the Court should be reluctant to interfere with the show cause notice unless the notice is shown to have been issued apparently without any authority of law. The relevant observations are thus: 23. The prayer for the issue of a writ of prohibition restraining the authorities under the Act from proceeding with the adjudication and the prosecution is essentially based on the constitutional challenge to the relevant provisions of the Act on the ground that they violate Articles 14 and 21 of the Constitution of India. Once we have held, as the High Court did, that the provisions are constitutional, the basis on which the writ of prohibition is sought for by the appellants disappears. It is settled by the decisions of this Court that a writ of prohibition will issue to prevent a Tribunal or Authority from proceeding further when the Authority proceeds to act without or in excess of jurisdiction; proceeds to act in v ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... are concerned. The High court, therefore, should not have interfered and should have left the respondents to pursue their remedy by way of an appeal under Section 9 of the Act from the order of assessment which, according to the High Court, had admittedly been passed before the writ petition had been filed by the respondent. 22. The ratio which could be culled out from the aforesaid judgment is that the power of judicial review, under Article 226 of the Constitution of India, can be exercised where challenge to a show cause notice is made provided it is patently demonstrated that the same is issued without jurisdiction or it does not disclose any offence to have been committed. Ordinarily High Court should not embark to decide the factual disputes but relegate the party to submit the reply before the authority concerned who is obliged to decide the same. The aforesaid rule is, however, not free from exception. The exception, carved out in the case of Indian Cardboard Industries Limited vs. Collector of Central Excise reported in 1992 (58) E.L.T. 508(Cal.), in our opinion, still holds the field. The aforesaid exception can be aptly quoted hereunder : 15. On the basis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on by the writ petitioner that notice was without jurisdiction and/or abuse of process of law would not suffice. It should be prima facie established to be so. Where factual adjudication would be necessary, interference is ruled out. 24. When we invited the attention of Mr. Poddar to Rule 142 of the Rules, which provides that the proper officer shall serve, along with the notice under Section of the Act, a summary thereof electronically in form GST DRC 01, the quick reply was that Rule 142(1)(a) is ultra vires as a result of excessive delegation. Rule 142 is specifically with respect to notice and order for demand of amounts payable under the Act . We find no merit in the contention of Mr. Poddar that Rule 142(1)(a) is invalid in any manner. 25. A rule under delegated legislation can be held to be ultra vires the statutory provisions of the Act if it is shown : (i) that it is beyond the scope of or in excess of the rule making power of the delegate conferred under the Act, or (ii) that it is in conflict with or repugnant to any enactment in the Act. 26. The question whether any particular legislation suffers from excessive delegation has to be decided having ..... X X X X Extracts X X X X X X X X Extracts X X X X
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