Jyoti Tar Products Private Limited & Anr. Vs Deputy Commissioner (Calcutta High Court)
In a recent ruling, the Calcutta High Court quashed a GST show-cause notice issued to Jyoti Tar Products Private Limited & Anr., emphasizing the need for tax authorities to consider pre-SCN replies before issuing further notices. The appeal, filed against an order dated 13th December 2024, challenged the show-cause notice under Section 74(1) of the CGST Act and W.B.G.S.T. Act, 2017. The notice was issued after the appellants had been informed through an intimation dated 10th July 2024 that they had claimed input tax credit (ITC) for transactions with non-existent entities, whose registrations were canceled. The intimation also warned that a show-cause notice would be issued if the tax amount was not paid.
The appellants submitted a detailed reply to this intimation on 18th July 2024, providing explanations and documents to support their position. However, when the show-cause notice was issued on 8th August 2024, it merely reiterated the contents of the original intimation and dismissed the reply as unsatisfactory without addressing the arguments and evidence submitted by the appellants. The Court found this approach flawed, noting that once an authority invokes its powers under Section 74(5), it is obligated to review the taxpayer’s response before proceeding with the issuance of a show-cause notice. The Court held that the authorities failed to consider the response properly, and as such, the notice was quashed.
