9911796707
TMI BlogThe Doctrine of Natural Justice in GST Proceedings: A Case Study on Show Cause Notice u/s 74"X X X X Extracts X X X X X X X X Extracts X X X X ..... ner, State Tax, NOIDA, U.P., alleging excessive availing of Input Tax Credit (ITC). Arguments Presented Petitioner's Arguments The petitioner's counsel argued that: Proceedings u/s 73 of the CGST Act were previously initiated against the petitioner for the same issue of excessive ITC availed. After considering the petitioner's reply and verifying the documents and amounts, the proceedings were dropped vide order dated 30.12.2023. Sections 73 and 74 of the CGST Act operate in different circumstances. Section 73 covers cases of wrongly availed or utilized ITC for reasons other than fraud or willful misstatement or suppression of facts, while Section 74 applies when ITC has been wrongly availed or utilized due to fraud, willful mis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ized due to fraud, willful misstatement, or suppression of facts. Once proceedings u/s 73 have been finalized, they cannot be reopened u/s 74 unless the adjudicating authority is prima facie satisfied that the petitioner has availed or utilized ITC due to fraud, willful misstatement, or suppression of facts. For deriving jurisdiction u/s 74 , the adjudicating authority must expressly mention in the Show Cause Notice that they are prima facie satisfied that the person has wrongly availed or utilized ITC due to fraud, willful misstatement, or suppression of facts. The impugned Show Cause Notice does not contain any mention of the petitioner having wrongly availed or utilized ITC due to fraud, willful misstatement, or suppression of facts. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... allowed the writ petition and quashed the impugned Show Cause Notice dated 03.08.2024. However, the Court left it open for the respondent to initiate fresh proceedings u/s 74 of the CGST Act against the petitioner by issuing a fresh Show Cause Notice containing the basic ingredients regarding fraud, willful misstatement, or suppression of facts to evade tax, if they exist. Doctrine or Legal Principle Discussed The judgement primarily discussed and deliberated on the doctrine of natural justice and the requirement of putting the assessee to notice regarding the specific allegation under the proviso to extend the period of limitation. The Court relied on the principles laid down by the Supreme Court in RAJ BAHADUR NARAIN SINGH SUGAR MILLS LTD ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... BAHADUR NARAIN SINGH SUGAR MILLS LTD. Versus UNION OF INDIA - 1996 (7) TMI 146 - Supreme Court and COLLECTOR OF CENTRAL EXCISE Versus H.M.M. LIMITED - 1995 (1) TMI 70 - Supreme Court , which highlighted the requirement of natural justice and the need to put the assessee to notice regarding the specific allegation under the proviso to extend the period of limitation. Consequently, the Court allowed the writ petition and quashed the impugned Show Cause Notice dated 03.08.2024, leaving it open for the respondent to initiate fresh proceedings u/s 74 of the CGST Act against the petitioner by issuing a fresh Show Cause Notice containing the basic ingredients regarding fraud, willful misstatement, or suppression of facts to evade tax, if they exis ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
