Commissioner of CGST Vs Saumya Agrotech Private Limited & Ors. (Calcutta High Court)
Calcutta High Court, in the case of Commissioner of CGST Vs Saumya Agrotech Private Limited & Ors., addressed an appeal by the revenue against a single-judge bench order that had quashed a show-cause notice (SCN) issued by the CGST. The writ petition challenging the SCN was filed by Saumya Agrotech Private Limited on the grounds that the pre-show-cause notice consultation process was a violation of natural justice principles. The company argued that it received the consultation notice on October 5, 2021, and on the same day, requested more time to gather documents for the audit period from 2006 to 2017. However, without a response to this request, the department issued a formal SCN on October 11, 2021. The single-judge bench had agreed with the company, quashing the notice but allowing the department to issue a new one.
The Division Bench of the Calcutta High Court agreed that the short time frame for consultation was a violation of natural justice. However, it disagreed with the decision to quash the SCN entirely. Instead, the court partially allowed the revenue’s appeal and modified the single-judge’s order. The court directed that the SCN dated October 11, 2021, should not be quashed but should be treated as “additional information” in addition to the initial audit observation. The respondent-company was given 15 days to submit a written objection to the audit observation and the allegations in the SCN. The court then directed the assessing officer to hold a personal hearing with the company, consider the submitted documents, and proceed on the merits of the case in accordance with the law within 10 days of the hearing. To protect the assessee’s rights, the court ordered that no coercive action be taken against the company until the process was complete. In return for this modification, the court stipulated that the respondent would not be able to raise the issue of limitation.
