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TMI Blog2024 (6) TMI 479X X X X Extracts X X X X X X X X Extracts X X X X ..... urse of proceedings. Therefore, the merits of the matter considered also as to whether the petitioner is liable for payment of GST on RCM basis under the provisions of the CGST Act or not, on RCM basis on the raw cotton purchased from the agriculturist. When the respondent No. 1 has issued the notice since 2022 pointing out to the petitioner that the petitioner is liable to pay the GST on RCM on the raw cotton purchased from agriculturist, the petitioner has not shown any willingness nor has given any reply except raising the technical pleas in response to the impugned show cause notice dated 30.8.2023 by reply dated 1.9.2023. The respondent No. 1 has considered the reply of the petitioner in detail and thereafter, has come to the conclusion relying upon the aforesaid Notification No. 43 of 2017 issued under Section 9 (3) of the CGST Act that the petitioner is liable to pay the GST under RCM on the raw cotton purchased from the agriculturist. On perusal of the show cause notice in Form GST DRC-01 as well as the impugned order is concerned, both refers to the Notification No. 43 of 2017 which was issued under Section 9 (3) of the CGST Act and, therefore, mentioning the Section 9 (4) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nder Section 9 (3) of the CGST Act and, therefore, no interference is required to be made for imposition of penalty by the impugned order. No interference is called for in the impugned order passed by the respondent No. 1 fastening the liability of amounting to Rs. 3,73,95,300/- along with the penalty of equal amount under Section 122 (2) of the GST Act upon the petitioner for non-payment of GST on RCM for the raw cotton purchased by the petitioner from 15.11.2017 onwards for the period for which the impugned order is passed. Petition dismissed. - HONOURABLE MR. JUSTICE BHARGAV D. KARIA AND HONOURABLE MR. JUSTICE NIRAL R. MEHTA Appearance : For the Petitioner(s) No. 1 : Mr Ashutosh S Dave (8865) For the Respondent(s) No. 1,2 : Ayaan A Patel (8900) ORAL JUDGMENT (PER : HONOURABLE MR. JUSTICE BHARGAV D. KARIA) 1. By this petition under Article 226 of the Constitution of India, the petitioner has challenged the notice dated 30.8.2023 issued by the respondent No. 1 in Form GST DRC-01 under Sections 74 (1), 122 (2) and 125 of the Central Goods and Service Tax Act, 2017 (for short the GST Act ) read with Rule 142 (1) of the Central Goods and Service Tax Rules, 2017 (for short the GST R ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1,25,244/- towards non-payment of tax on the purchase of cotton from agriculturist for the period 2017-18 (15.11.2017 to 31.3.2018) as per RCM. 2.7 The respondent No. 2 thereafter issued summons to the petitioner under Section 70 of the GST Act on 13.6.2023, 21.6.2023 and 30.6.2023. On 10.7.2023, the respondent No. 2 issued a garnishee communication to the banker of the petitioner i.e. Bank of Baroda to restrict debit transactions in the cash credit account of the petitioner and further instructed the Bank Manager, Bank of Baroda to restrict the debit entries of all accounts operated by the petitioner under the same PAN without prior permission. 2.8 The petitioner thereafter by letter dated 19.7.2023 requested for lifting of attachment and passing of appropriate direction under Form DRC-23 as per Rule 159 (5) of the GST Rules. The petitioner thereafter preferred Special Civil Application No. 13291 of 2023 before this Court. This Court by order dated 3.8.2023 directed the respondent No. 1 to provisionally lift the attachment over the cash credit account which came to be further extended till further orders. 2.9 The petitioner thereafter received the impugned notice dated 8.8.2023 in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was submitted that the respondent authority could not have issued the notice by invoking the provision of Section 74 as there is no fraud or misrepresentation made by the petitioner. The petitioner has filed reply to the notice dated 30.8.2023, on 1.9.2023 giving detail explanation as to why the petitioner has not paid the GST under RCM for purchases made from agriculturist. 3.2 Learned advocate Mr. Dave referred to aforesaid reply wherein it was contended that there was no mala fide intention of the petitioner to evade tax coupled with the ingredients of misrepresentation or suppression of facts. It was also pointed out to the respondents that the notice dated 19.10.20222 issued under Section 73 of the Act by the respondent No. 2 is contrary to the provision of Section 73 (10) of the Act as the same was beyond the period of limitation of 3 years. It was, therefore, submitted that the respondents have deliberately invoked the provision of Section 74 to avail the benefit of extended period of limitation of 5 years under the provision of Section 74 of the Act. It was, therefore, submitted that the impugned notice dated 30.8.2023 is contrary to the provision of Section 74 and liable t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re is no fraud or misrepresentation or any illegality committed by the petitioner, as the petitioner has bona fidely not paid the GST on RCM basis for the purchases made from agriculturist. 3.7 Learned advocate Mr. Dave referred to and relied upon the submissions made before the respondent No. 1 in the reply to the show cause notice to justify the stand of the petitioner. It was submitted that the petitioner has also contended about revenue neutrality transaction in the reply. However, the same is not considered by the respondent No. 1 in its true perspective and has passed the impugned order relying upon the provisions of Section 9 (3) of the CGST Act. 3.8 Learned advocate Mr. Dave, in support of his submissions, relied upon the following decisions : (1) Siemens Limited v. State of Maharashtra Ors., reported in (2006) 12 SCC 33. (2) Union of India v. Vicco Laboratories, reported in (2008) taxmann.com 520 (SC). (3) Union of India v. Arviva Industries Limited, reported in (2008) 12 STT 28 (SC). (4) India Tourism Development Corporation v. Delhi Administration, reported in (2014) taxmann.com 96 (Delhi). (5) Simplex Infrastructures Limited v. Commissioner of Service Tax, Kolkata, repo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... purchase was found to be made from agriculturist during Financial Year 2018-19, on which the GST on RCM basis was not paid and after considering the same, the petitioner was advised to make the payment of Rs. 3,73,95,300/- on the liability ascertained under Section 74 of the CGST Act. The petitioner, however, did not respond to the said notice. Therefore, it was submitted that the respondent No. 1 issued the notice dated 30.8.2023 in Form GST DRC-01 under Section 74 of the CGST Act. 4.3 It was submitted that the petitioner has challenged this notice and during the pendency of this petition, the petitioner appeared and proceeded with the hearing before the respondent No. 1 and as no stay was granted by this Court, the respondent No. 1 has passed the impugned order considering the submissions made by the petitioner. As to the contention of mentioning of Section 9 (4) in the show cause notice, it was submitted that perusal of the show cause notice, it refers to the Notification No. 43 of 2017 issued under Section 9 (3) of the CGST Act and, therefore, merely mentioning of Section 9 (4) in the show cause notice would not alter the situation as the petitioner is liable to pay GST on RCM ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... twenty per cent., as may be notified by the Government on the recommendations of the Council and collected in such manner as may be prescribed and shall be paid by the taxable person. (2) The central tax on the supply of petroleum crude, high speed diesel, motor spirit (commonly known as petrol), natural gas and aviation turbine fuel shall be levied with effect from such date as may be notified by the Government on the recommendations of the Council. (3) The Government may, on the recommendations of the Council, by notification, specify categories of supply of goods or services or both, the tax on which shall be paid on reverse charge basis by the recipient of such goods or services or both and all the provisions of this Act shall apply to such recipient as if he is the person liable for paying the tax in relation to the supply of such goods or services or both. (4) [The Government may, on the recommendations of the Council, by notification, specify a class of registered persons who shall, in respect of supply of specified categories of goods or services or both received from an unregistered supplier, pay the tax on reverse charge basis as the recipient of such supply of goods or s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d or short paid or erroneously refunded or where input tax credit has been wrongly availed or utilised by reason of fraud, or any wilful-misstatement or suppression of facts to evade tax, he shall serve notice on the person chargeable with tax which has not been so paid or which has been so short paid or to whom the refund has erroneously been made, or who has wrongly availed or 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. xxx xxx xxx (5) The person chargeable with tax may, before service of notice under sub-section (1), pay the amount of tax along with interest payable under section 50 and a penalty equivalent to fifteen per cent. of such tax on the basis of his own ascertainment of such tax or the tax as ascertained by the proper officer and inform the proper officer in writing of such payment. Notification No. 8/2017 dated 28.6.2017 G.S.R. (E).- In exercise of the powers conferred by sub-section (1) of section 11 of the Central Goods and Services Tax Act, 2017 (12 of 2017), the Central Governmen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ions of the said Act shall apply to such recipient, namely:- Notification No. 43/2017 dated 14.11.2017 G.S.R. (E).- In exercise of the powers conferred by sub-section (3) of section 9 of the Central Goods and Services Tax Act, 2017 (12 of 2017), the Central Government, on the recommendations of the Council, hereby makes the following amendments in the notification of the Government of India in the Ministry of Finance (Department of Revenue), No. 4/2017-Central Tax (Rate), dated the 28th June, 2017, published in the Gazette of India, Extraordinary, Part II, Section 3, Sub-section (i), vide number G.S.R. 676 (E), dated the 28th June, 2017, namely:- In the said notification, in the TABLE:- (i) after Sl. No. 4 and the entries relating thereto, the following serial number and the entries shall be inserted, namely:- 4A 5201 Raw cotton Agriculturist Any registered person. 2. This notification shall come into force with effect from the 15th day of November, 2017. 6. On perusal of the above provisions as well as the Notifications issued from time to time, more particularly under Section 9 (3) of the CGST Act, the registered dealer, who purchases raw cotton falling in Tariff Item 5201 from a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... extended period of 5 years for initiating action for assessment. 10. On perusal of the show cause notice in Form GST DRC-01 as well as the impugned order is concerned, both refers to the Notification No. 43 of 2017 which was issued under Section 9 (3) of the CGST Act and, therefore, mentioning the Section 9 (4) in the notice would not make the notice illegal. The petitioner was made aware that the petitioner is liable to pay the GST under RCM on the basis of the Notification No. 43 of 2017 which is issued under Section 9 (3) of the CGST Act and, therefore, the contention of the petitioner that the notice and the order are passed under different Sections 9 (3) and 9 (4) cannot be accepted. 11. On perusal of Section 9 (3) of the CGST Act, the same applies for payment of GST on RCM wherein the Government, on recommendation of the Council by notification, has specified the categories of supply of goods or services or both, the tax on which GST is to be paid on reverse charge basis by the recipient of such goods or services or both and the provisions of the Act to apply to such recipient as if he is the person liable for paying the tax. Whereas sub-section (4) of Section 9 refers to th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n ble Apex Court in the case of Arviva Industries Limited (supra), the same was in context of binding circular No.39/1999 dated 25.6.1999 extending the benefit of brand rate of drawbacks to compensate exporters for re-rolled steel products and processed fabrics, wherein it is held by the Hon ble Apex Court that the circulars issued by the Board are binding on the department. 15. The decision of the Hon ble Delhi High Court in the case of India Tourism Development Corporation (supra) is concerned, the same was pertaining to Section 11A of the Central Excise Act, 1944 read with Section 73 of the Finance Act, 1994, wherein the recovery of the duty of the tax not levied/paid or short paid or erroneously refunded, the scope of show cause notice was examined and in such cases, it was held by the Delhi High Court that the authority has no power to review its order and cannot issue a second show cause notice on same matter for same period. In the facts of the case, there is no second notice was issued by the respondent authorities and only the intimation was issued under Form GST DRC-01A under Section 73 and after further investigation, when it was found that the petitioner has made suppre ..... X X X X Extracts X X X X X X X X Extracts X X X X
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