Himalaya Wellness Company Vs Union of India (Himachal Pradesh High court)
In a recent ruling, the High Court has dismissed a writ petition filed by a partnership firm challenging a significant Goods and Services Tax (GST) show cause notice demanding over ₹4.37 Crore in alleged inadmissible input tax credit (ITC), short-paid GST, interest, and penalty. The court held that the petition was not maintainable due to the availability of an alternate statutory remedy under the Central Goods and Service Tax Act, 2017 (CGST Act).
The petitioner, engaged in the supply of personal care and pharmaceuticals, had received the show cause notice under Section 74(1) of the CGST Act following an audit by the Central Tax Department. The notice, dated May 31, 2024, consolidated various demands related to alleged irregularities, including ITC availed on Goods Transportation Agency (GTA) services.
Prior to the show cause notice, the firm had undergone an audit, received an enquiry notice, filed a reply, and subsequently was issued a Final Audit Report. A demand notice (DRC-01A) was also issued before the final show cause notice (DRC-01) was served. The petitioner argued before the court that the show cause notice was issued with a pre-conceived mind and in violation of principles of natural justice, thus justifying the invocation of the High Court’s writ jurisdiction despite the existence of statutory remedies. They sought reliefs including the quashing of the notice, a declaration of their ITC eligibility, retrospective application of an amendment to Section 16(2)(b) of the CGST Act, and a ruling that Section 74 proceedings do not survive absent willful suppression.
