Case Law Details
Sri Nanjudappa Constructions Vs Union of India (Karnataka High Court)
Summary: The Karnataka High Court, in the case of Sri Nanjudappa Constructions Vs Union of India [Writ Petition No. 34742 of 2024], held that filing a writ petition against a tax intimation issued under Section 73(5) of the Central Goods and Services Tax Act, 2017 is premature. The court observed that such intimation is not a final demand but rather an opportunity for the taxpayer to either pay the ascertained tax with interest or file objections before further proceedings. It clarified that if the taxpayer fails to respond to the intimation, the authorities would issue a show cause notice (SCN) under Section 73(1), followed by an order under Section 73(9). Consequently, the court dismissed the writ petition, noting that no SCN or final order had been issued yet. The petitioner had argued against the tax intimation, claiming non-liability to pay tax on royalty. However, the respondent contended that the intimation merely facilitates voluntary compliance or an opportunity to raise objections, and it does not constitute a final determination. The court emphasized that taxpayers must exhaust the procedural remedies provided under the CGST Act before approaching the judiciary. This case reinforces the principle that writ petitions cannot substitute statutory remedies for addressing disputes under tax laws.
Facts:
M/s. Sri Nanjudappa Constructions (“the Petitioner”) were issued intimation of tax along with interest under Section 73(5) of the CGST Act.
The Petitioner contended that they were not liable to pay tax on royalty.
Hence, aggrieved by the circumstances, the Petitioner filed the present writ petition.
The Respondent contended that the writ petition is premature and, intimation under Section 73(5) of CGST Act is to provide an opportunity to the Petitioner to pay the ascertained tax along with applicable interest, failing to pay, show cause notice (“the SCN”) would be issued under Section 73(1) of the Karnataka Goods and Services Tax Act, 2017 (“the KGST Act”). Further, the Petitioner can file any submission against the intimation of ascertainment of tax, it is open for the Petitioner to submit his submission.
Issue:
Whether application for writ petition can be filed in absence of the SCN?
Held:
The Hon’ble Karnataka High Court in Writ Petition No. 34742 of 2024 (T-RES) held as under:
- Noted that, intimation of tax ascertained under Section 73(5) of the KGST Act reveals that it is only an intimation of ascertained tax with liberty to the Petitioner to pay along with interest or to file his submission. Failing to pay the ascertained tax, the Petitioner would be issued further notice under Section 73(1) the KGST Act and thereafter the Competent Authority shall have to pass an order under Section 73(9) of the KGST Act. Further, intimation of tax ascertained provides an opportunity to file any submission of the Petitioner against the said intimation itself.
- Held that, no SCN is issued under Section 73(1) of the KGST Act and no order in terms of Section 73(9) of the KGST Act is passed. Hence, the present writ petition is too premature and the same is liable to be rejected at the present stage.
Our Comments:
Section 73 of the CGST Act governs “Determination of tax, pertaining to the period up to Financial Year 2023-24, not paid or short paid or erroneously refunded or input tax credit wrongly availed or utilised for any reason other than fraud or any wilful-misstatement or suppression of facts.”. Section 73(5) of the CGST Act clearly states that person chargeable with tax may, before service of notice under 73(1) or, as the case may be, the statement under 73 (3), pay the amount of tax along with interest payable thereon under section 50 on the basis of his own ascertainment of such tax or the tax as ascertained by the proper officer and inform the proper officer in writing of such payment.
FULL TEXT OF THE JUDGMENT/ORDER OF KARNATAKA HIGH COURT
Heard the learned counsel Sri. Ganapathi Narayana Bhat for petitioner, learned counsel Smt. Swathi L. Kamat for respondent No.1 and learned Additional Government Advocate Sri. K. Hemakumar for respondent Nos.2 and 3. Perused the writ petition papers.
2. Learned counsel Sri. Ganapathi Narayan Bhat for petitioner would submit that petitioner is before this Court questioning Annexure-D, intimation of tax issued under Section 73(5) of the KGST/CGST Act, 2017, since the petitioner is not liable to pay tax on royalty.
3. Per contra, learned Additional Government Advocate Sri. K. Hemakumar would point out that writ petition is premature and Annexure-D, intimation under Section 73(5) of CGST Act, 2017 is to provide an opportunity to the petitioner to pay the ascertained tax along with applicable interest, failing to pay, show cause notice would be issued under Section 73(1) of KGST Act. Further, he invites attention of this Court to page 83 of the writ petition and submits that in case the petitioner intends to file any submission against the intimation of ascertainment of tax, it is open for the petitioner to submit his submission. Learned Additional Government Advocate would further submit that if the petitioner fails to pay the ascertained tax as intimated under Annexure-D, the Authority shall have to issue show cause notice under Section 73(1) and pass orders under Section 73(9) of the Act and thereafter the Authority will proceed with demand and recovery proceedings.
4. Having heard the learned counsel appearing for the parties and on perusal of the writ petition papers along with the provisions of KGST Act, I am of the view that writ petition of the petitioner is too premature and the same is liable to be rejected at this stage.
5. A perusal of Annexure-D, intimation of tax ascertained under Section 73(5) of KGST Act, 2017 would reveal that it is only an intimation of ascertained tax with liberty to the petitioner to pay along with interest or to file his submission. Failing to pay the ascertained tax, petitioner would be issued further notice under Section 73(1) and thereafter the Competent Authority shall have to pass order under Section 73(9) of KGST Act. Further, intimation of tax ascertained at Annexure-D also provides an opportunity to file any submission of the petitioner against the said intimation itself.
6. Since no show cause notice under Section 73(1) of KGST Act is issued and no order in terms of Section 73(9) of KGST Act is passed, the present writ petition would be premature. Hence, writ petition stands rejected.
*********
(Author can be reached at info@a2ztaxcorp.com)
Author Bio
