Ravs Power lnfra Private Limited Vs Superintendent of Central Tax (Telangana High Court)
1. Introduction
The Telangana High Court delivered a significant judgment reinforcing voluntary compliance under the GST regime. The Court held that when a taxpayer pays the entire tax liability along with applicable interest before issuance of a Show Cause Notice (SCN), the department cannot initiate proceedings under Section 73 or 74 of the CGST Act for the same demand.
2. Background of the Case
The petitioner, engaged in generating solar power, was subjected to a GST audit for the period July 2017 to March 2019. The audit team highlighted irregularly availed Input Tax Credit (ITC) in its provisional findings on 14 October 2021. In response, the petitioner voluntarily reversed the ITC and paid the entire tax liability along with applicable interest on 28 October 2021—well before issuance of any notice or final audit report.
Despite the complete payment, the department issued an SCN under Section 74 on 20 April 2022 alleging fraud, suppression, and willful misstatement. An Order-in-Original followed, confirming demand and imposing penalty. The petitioner challenged the same before the High Court.
3. Issues Before the Court
- Whether an SCN can be issued after full voluntary payment made before notice.
- Whether Section 74 was rightly invoked in the absence of proven fraud or suppression.
- Whether writ jurisdiction is maintainable despite availability of appellate remedy.
4. Court’s Findings and Analysis
A. Voluntary Payment Bars Issuance of SCN
The Court emphasized that Section 73(5) permits voluntary payment of tax and interest before issuance of SCN. Under Section 73(6), once such payment is made, the officer is mandated not to issue an SCN for the amount already paid.
B. Invocation of Section 74 Not Justified
The Court held that merely availing ineligible ITC does not amount to fraud or willful suppression. There must be concrete evidence showing intention to evade tax. The petitioner’s voluntary payment during audit negates such intent.
C. Proceedings Held to Be Without Jurisdiction
The SCN was issued almost six months after the taxpayer’s voluntary payment. This violated Section 73(6), rendering the SCN and subsequent proceedings without jurisdiction.
D. Writ Petition Maintainable
Despite availability of an appellate remedy, the Court ruled the writ maintainable, since the SCN itself lacked legal authority. A jurisdictionally defective notice need not be appealed—writ relief is appropriate.
5. Outcome of the Judgment
✔ The SCN issued under Section 74 was quashed.
