Safset Agencies Pvt. Ltd. Vs Union of India & Others (Bombay High Court)
Bombay High Court, in Safset Agencies Pvt. Ltd. vs. Union of India & Others, refused to interfere with a show cause notice issued to the petitioner regarding taxation of a 5% discount given to owners of goods. The petitioner sought quashing of the notice, arguing that the tax authorities were attempting to override an Advance Ruling in its favor issued by the Appellate Authority on October 7, 2019. The Revenue Department, however, contended that the Advance Ruling was irrelevant to the current proceedings and that the discount constituted a taxable supply of service.
The petitioner maintained that the authorities were exceeding their jurisdiction by revisiting an issue already settled in the Advance Ruling. The Revenue, on the other hand, argued that the petitioner had admitted during an investigation that the 5% margin recovered from owners was a service. This, according to the authorities, was taxable under GST, warranting the issuance of a show cause notice.
The Court held that the petitioner must contest the claims before the tax authorities rather than seeking intervention at the show cause notice stage. It emphasized that the adjudicating authority is responsible for determining the validity of the tax demand, including whether the notice contradicts the previous Advance Ruling. The decision aligns with judicial precedents such as Union of India v. Coastal Container Transporters Association (2019), where courts have refrained from interfering in tax proceedings before adjudication.
