Failure to Respond to Show Cause Notice Renders Writ Petition Inadmissible: Kerala HC

Dileep Divakaran Vs State Tax Officer (Kerala High Court)

The recent judgment by the Kerala High Court in the case of Dileep Divakaran vs. State Tax Officer sheds light on the consequences of failing to respond to a show cause notice. The petitioner challenged an order issued under Section 73 of the CGST/SGST Act 2017, demanding CGST, SGST, interest, and penalty. Let’s delve into the details of this case.

Background

1. The Petition and the Order : The petitioner filed a writ petition challenging the order (Ext.P1) issued by the 1st respondent. The order demanded an amount of Rs. 7,46,638/-, including CGST and SGST, along with interest and penalty. The order was issued under Section 73 of the CGST/SGST Act 2017.
2. Show Cause Notice and Non-Response: The petitioner received a show cause notice. However, the petitioner neither filed a reply nor attended a personal hearing. Consequently, a best judgment assessment was made due to the petitioner’s non-participation.

Legal Challenge and Court’s View

1. Statutory Remedy Not Pursued:  Instead of availing the statutory remedy under Section 107 of the CGST/SGST Act, the petitioner approached the High Court. The petitioner challenged the DRC-07 but not the order passed under Section 73(9).
2. Entitlement to Approach the Court:  The Court held that a taxpayer who fails to respond to a show cause notice and does not provide supporting documents cannot approach the Court. The petitioner’s writ petition was deemed not maintainable due to the lapse of the statutory limitation period and the lack of response to the notice.

Conclusion: The Kerala High Court’s ruling emphasizes the importance of timely responses to show cause notices. Failure to do so may render a writ petition inadmissible. Taxpayers must be diligent in complying with legal procedures to protect their rights.

FULL TEXT OF THE JUDGMENT/ORDER OF KERALA HIGH COURT

The present writ petition has been filed impugning the order in Ext.P1 passed by the 1^st respondent issued under Section 73 of the CGST/SGST Act 2017 demanding the CGST and SGST along with interest and penalty for an amount of Rs.7,46,638/-. GST DRC-01 has been issued in pursuance of the order dated 10.07.2023 in Ext.P3, under Section 73(9) of the CGST/SGST Act 2017.

2. The petitioner was issued a show cause notice. However, the petitioner did not file any reply nor appear for a personal hearing. In view thereof, the best judgment assessment has been passed as the petitioner failed to file a reply to show cause notice, did not even participate in the proceedings and failed to avail the opportunity of hearing.

3. The petitioner, instead of taking recourse to the statutory remedy within the time prescribed under Section 107 of the CGST/SGST Act, has approached this Court impugning the DRC-07 and not the order passed under Section 73(9).

4. A taxpayer who fails to file a reply to the show cause notice and does not produce the document in support of his claim is not entitled to approach this Court. Hence, I am of the considered view that the writ petition is not maintainable in view of the fact that the petitioner has approached this Court after the statutory period of limitation is over and he did not respond to the show cause notice, nor did he avail the opportunity of hearing.

With the above observation, the present writ petition is dismissed.