Case Law Details
Abdul Saleem Vs Assistant Commissioner (Kerala High Court)
Kerala High Court dismissed a writ petition challenging a show cause notice issued under Section 127 of the CGST and KSGST Acts, 2017. The petitioner was accused of issuing fake invoices without an actual supply of goods, using another entity’s GST registration for financial gain. The authorities alleged that the petitioner conspired with others to evade taxes by generating fraudulent Input Tax Credit. The petitioner argued that Section 122(1)(a) was enacted only from January 2021, making the charges for the period between October 2019 and March 2020 invalid. Additionally, the petitioner claimed that he was not a taxable person under the GST framework, rendering the proceedings against him legally unsound.
The court, after hearing both parties, ruled that the petitioner had an available remedy by filing an objection to the show cause notice and seeking adjudication on merits. It emphasized that judicial intervention under Article 226 of the Constitution is limited and should only be exercised in exceptional circumstances. The court cited past rulings, including Vicco Laboratories (2007), which established that interference at the show cause notice stage should be rare. The petitioner was granted two weeks to submit objections, which would be considered per legal procedures. Consequently, the writ petition was dismissed, directing the petitioner to explore alternative remedies within the prescribed legal framework.
FULL TEXT OF THE JUDGMENT/ORDER OF KERALA HIGH COURT
Petitioner has been served with a show cause notice dated 16.10.2024 issued under Section 127 of the Central Goods and Services Tax Act, 2017 and the Kerala State Goods and Services Tax Act, 2017, alleging that investigation revealed that petitioner and another person had issued fake invoices without any underlying supply of goods using the GST registration of another entity for monetary benefits. It is also alleged that there was a conspiracy between petitioner and two other persons to dupe the Government by issuing fake invoices and arranged fake Input Tax Credit for the purpose of evading tax at some stage.
2. Petitioner has challenged the aforesaid notice, stating that Section 122(1)(a) was brought into force only with effect from 01.01.2021, and therefore, petitioner cannot be proceeded against for the period from October 2019 to March 2020. It is also contended that the petitioner, being admittedly not a taxable person even as per the show cause notice, the proceeding initiated against him now, is without any legal validity.
3. I have heard Sri. M.P. Shameem Ahamed, the learned counsel for the petitioner and Sri. V.Girishkumar, the learned Standing Counsel for the respondent.
4. Since petitioner is assailing a show cause notice, he has a remedy of filing an objection and invite an adjudication on merits. Even though petitioner referred to the decision of the Bombay High Court in Shanthanu Sanjay Hundaikari vs. Union of India and Others [2024 (89) GSTL 62], I am of the view that the facts of the said case were totally different. In the said case, an employee of a company was prosecuted against for the alleged mischief of the company. In such circumstances, the High Court of Bombay interfered with the show cause notice. However, facts and the instant circumstances of the present case are totally different.
5. The extraordinary remedy of Article 226 of the Constitution of India cannot be invoked to challenge a show cause notice unless there are exceptional reasons. In the decision in Union of India and Another vs. Vicco Laboratories [(2007) 13 SCC 270], it was held that interference at the stage of show cause notice should be rare and not in a routine manner. It was also held that mere assertion that notice is without jurisdiction or that it is an abuse of process of law would not suffice to exercise jurisdiction. When factual adjudication is necessary, interference under Article 226 of the Constitution of India is ruled out.
6. The reasons now stated by the petitioner are all matters which can be agitated before the adjudicating authority itself. The issue requires factual adjudication as well.
7. Hence, I find no reason to entertain this writ petition under Article 226 of the Constitution of India and relegate the petitioner to pursue other remedies available under law by filing an objection and inviting an order of adjudication. Since it is conceded that the petitioner has not yet filed an objection to Exhibit-P1 show cause notice, a period of two weeks is granted to the petitioner to file an objection to the same. If any such objection is filed, the same shall be considered in accordance with law.
The writ petition is dismissed with the above observations.
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