HC stays GST Show Cause Notice issued without issuing Form GST ASMT-10 [Read Order]

The Gauhati High Court in the matter of M/S. Pepsico India Holdings Pvt. Ltd. Vs. The Union Of India And 3 ORS stayed the GST Show Cause Notice issued without issuing Form GST ASMT-10.

In this writ petition instituted under Article 226 of the Constitution of India, assail is made by the petitioner company to a Demand-cum-Show Cause Notice bearing E-File no. GEXCOM/ADJN/GST/ADC/297/2023 dated 05.09.2023 [Annexure-2] issued by the respondent no. 2 under Section 73[1] of the Central Goods and Services [CGST] Act, 2017, whereby, the petitioner company has been called upon to show cause as to why [i] Input Tax Credit [ITC] wrongly availed amounting to Rs. 19,51,41,111 [including Rs. 3,96,96,249.60 [CGST], Rs. 3,94,92,435.50 [SGST], Rs. 11,58,62,136.13 [IGST] and Rs. 90,290 [Cess] for the Financial Year : 2017-2018; in terms of Section 73[1] of the CGST Act, 2017 r/w Notification no. 09/2023-Central Tax dated 31.03.2023 and the corresponding section under the Assam SGST Act, 2017 r/w Section 20 of the IGST Act, 2017; [ii] applicable interest on the wrongly availed ITC in terms of Section 50 of the CGST Act and the corresponding Section under the Assam SGST Act, 2017 r/w Section 20 of the IGST Act; and [iii] penalty on the wrongly availed and utilized ITC as mentioned in Point no. [i] above in terms of Section 73 [9] of the CGST Act, 2017 and the corresponding Section under the Assam SGST Act, 2017 r/w Section 20 of the IGST Act, 2017; should not be demanded and recovered.

It is the further contention of the petitioner that as per the impugned Demand-cum-Show Cause Notice, the alleged discrepancy is that the petitioner company did not submit information in Table 14 in FORM GSTR-9C and as a result, there was a mismatch with the details furnished in FORM GSTR-9. FORM GSTR-9C with Table 14 contains details as to ‘Reconciliation of ITC declared in annual return [GSTR-9] with ITC availed on expenses as per Audited Annual Financial Statement or books of account’. By Notification no. 56/2019-Central Tax dated 14.11.2019, Notification no. 79/2020-Central Tax dated 15.10.2020, Notification no. 30/2021-Central Tax dated 30.07.2021, Notification no. 14/2022- Central Tax dated 05.07.2022 and Notification no. 38/2023-Central Tax dated 04.08.2023, submission of information in Table 14 of FORM GSTR-9C has been made optional for the Financial Years : 2017-2018, 2018-2019, 2019-2020, 2020-2021, 2021-2022 and 2022-2023. It is, thus, contended that since submission of information in Table 14 if FORM GSTR-9C has been made optional, there cannot be any error or discrepancy from the non filing of information on the part of the petitioner company in Table 14 of FORM GSTR9C.

As Mr. Keyal, learned Standing Counsel, GST has appeared and accepted notice on behalf of all the respondents, no formal notices need to be issued to the respondents. Mr. Borah, learned counsel for the petitioner shall, however, furnish requisite nos. of extra copies of the writ petition along with annexures, to Mr. Keyal by tomorrow.

The respondents in Polar Marmo Agglomerates Ltd. [supra] were served with a notice to show cause as to why the agglomerated marble should not be exigible to excise duty under Tariff Heading 68.07. The Hon’ble Supreme Court of India found that the question involved was a question of fact, “Whether the properties and characteristics of agglomerated marble remain the same as those of excavated marble?” Having found the High Court going into the questions of fact to resolve the question, it has been observed that the High Court should not have interfered, in a writ petition, at the stage of show cause notice to take over the fact finding investigation. In Coastal Container Transporters Association [supra], the Hon’ble Supreme Court of India has observed that the writ petition under Article 226 of the Constitution of India was preferred at the stage of show cause notice and had further found that the case was neither a case of lack of jurisdiction nor it involved any violation of principles of natural justice so as to entertain the writ petition at the stage of show cause notice. It was found that there was a serious dispute with regard to classification of service and as such, the respondents ought to have responded to the show cause notice by placing materials in support of their stand instead of approaching the High Court questioning the show cause notice. In Magadh Sugar and Energy Ltd.[supra], the High Court declined to entertain the writ petition on the ground that the dispute between the parties was factual in nature and interference was declined without observation that it would be appropriate that the dispute be adjudicated in terms of the statutory remedy. The Hon’ble Supreme Court of India has observed that while the High Court would normally not exercise its writ jurisdiction under Article 226 of the Constitution of India if any effective and efficacious alternate remedy is available, the existence of an alternate remedy does not by itself bar the High Court from exercising its jurisdiction in certain contingencies. References have been made to the decisions in Whirlpool Corporation [supra] and Harbanslal Sahni [supra] to observe that there could be exceptions to the rule of alternate remedy where [a] the writ petition has been filed for the enforcement of a fundamental right protected by Part III of the Constitution; [b] there has been a violation of the principles of natural justice; [c] the order or proceedings are wholly without jurisdiction; or [d] the vires of a legislation is challenged. An alternative remedy by itself does not divest the High Court of its powers under Article 226 of the Constitution in an appropriate case.

The issues raised in the present writ petition, prima facie, are not relatable to any disputed questions of fact. The petitioner has raised a contention that the statutory prescriptions contained in Section 61 and Section 73 of CGST Act, 2017 r/w Rule 99 of the CGST Rules, 2017 have not been adhered to and without adherence to the conditions precedent, that is, issuance of notice to the registered person in Form GST ASMT-10 to provide the noticee either to accept or not to accept the discrepancy or to furnish an explanation for the discrepancy in Form GST ASMT-11 or not to furnish any explanation, at a period of time anterior to the impugned Demand-cum-Show Cause Notice, the Proper Officer could not have assumed jurisdiction to issue the Demand-cum-Show Cause Notice under sub-section [1] of Section 73 of the CGST Act, 2017. Prior to issuance of a show cause notice under Section 73[1] of the CGST Act, 2017, it is mere discrepancy. At that stage, the alleged discrepancy would only be a discrepancy simplicitor but at the stage of issuance of Demand-cum-Show Cause Notice under Section 73[1] of the CGST Act, 2017, there is formation of a prima facie opinion on the part of the Proper Officer that there is an act, which is in violation of the statutory obligation cast on the noticee. Admittedly in the case in hand, the Form GST ASMT-10 was not issued to the petitioner. A contention has also been raised that the CAG is not the Proper Officer to issue any kind of letters regarding the discrepancy.

Prima facie, this Court finds force in the above contentions advanced by the petitioner that an act of issuance of the impugned Demand-cum-Show Cause Notice dated 05.09.2023 under Section 73[1] of the CGST Act, 2017 by the Proper Officer was without compliance of the mandatory conditions precedent, prescribed under the CGST Act, 2017 and the CGST Rules, 2017, more particularly, the provisions of Section 61 of the CGST Act, 2017 r/w Rule 99 of the CGST Rules, 2017, to derive jurisdiction to issue such a Demand-cum-Show Cause Notice under Section 73[1] of the CGST Act, 2017, impugned herein. In view of the same, it is ordered that the operation of the impugned Demand-cum-Show Cause Notice bearing E-File no. GEXCOM/ADJN/GST/ADC/297/2023 dated 05.09.2023 [Annexure-2] shall remain stayed, till the returnable date.

The respondent GST authorities shall file their response in the meantime.

The Communication bearing no. V-3[3]/Law/HC/GHY/2023/110 dated 11.12.2023, placed by Mr. Keyal, be kept with the case record by marking the same as Document-‘X’.

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