Appellant entitled to materials based on which SCN under GST was issued: Kerala HC

N. C. John & Sons Pvt. Ltd. Vs State Tax Officer (Kerala High Court)

In a landmark ruling by the Kerala High Court, the rights of appellants to access materials related to Show Cause Notices (SCN) issued under the Kerala State Goods and Services Tax/Central Goods and Services Tax Act, 2017 (KSGST/CGST Acts) have been unequivocally affirmed. The case of N. C. John & Sons Pvt. Ltd. vs. State Tax Officer highlights a significant procedural aspect of tax administration, ensuring that appellants are equipped with necessary information to contest SCNs effectively.

The appellant, N. C. John & Sons Pvt. Ltd., challenged a specific show cause notice that alleged violations of sub-Rule (10) of Rule 96 of the CGST/SGST Rules, concerning the failure to pay applicable tax for availing an erroneous refund. The primary contention was the lack of detailed information regarding the alleged violations, which hampered the appellant’s ability to mount an informed response.

The Kerala High Court’s decision underscores a critical facet of legal procedures under the GST framework – the right to be informed. By mandating the provision of detailed materials and information on which SCNs are based, the court reinforces the principle of fairness in administrative proceedings. This ensures that appellants are not left in the dark about the specifics of the allegations against them, thereby enabling a substantive and informed reply.

This ruling by the Kerala High Court sets a precedent for transparency and fairness in the issuance and contestation of Show Cause Notices under the GST regime. It affirms the right of appellants to access detailed materials related to SCNs, ensuring that responses are well-informed and grounded in the specifics of the case. This decision is a significant step towards enhancing the procedural integrity of tax administration, providing a more equitable platform for taxpayers to contest allegations of non-compliance.

FULL TEXT OF THE JUDGMENT/ORDER OF KERALA HIGH COURT

The appellant filed the writ petition impugning Ext.P7 show cause notice issued u/s 73 of the Kerala State Goods and Services Tax/Central Goods and Services Tax Act, 2017 (‘KSGST/CGST Acts’ for short). The allegation in the show cause is that the appellant has violated sub-Rule (10) of Rule 96 of the Central Goods and Services Tax/ State Goods and Services Tax Rules (‘CGST/SGST Rules’ for short) inasmuch as it failed to pay applicable tax to avail an erroneous refund. The learned Single Judge disposed of the writ petition as per the judgment dated 2^nd February 2024 permitting the appellant to file reply to Ext.P7 within 10 days. It is challenging the said judgment; the appellant is before us.

2. We have heard Sri. M. Balagopal, the learned counsel for the appellant and Sri. V.K. Shamsudheen, the learned Senior Government Pleader.

3. It is the case of the appellant that the details of alleged violation of sub-Rule 10 of Rule 96 of CGST/SGST Rules have not been provided to and in the absence of requisite details, it is not in a position to give a proper reply. The learned Government Pleader submits that Ext.P7 is only a show cause notice, and it is for the appellant to file proper reply to the same and to substantiate that there is no basis for issuing such a notice to it. He further submits that if the appellant has a case that requisite materials, based on which the show cause notice has been issued, have not been supplied, it is for appellant to make a request to the officer concerned for the supply of those materials.

Having heard both sides, we are of the view that since Ext.P7 is only a show cause notice, the appellant must, at least at the first instance, appear before the officer and show cause against the proposals in Ext.P7. However, the learned counsel for the appellant is right in contending that the appellant is entitled to the materials on the basis of which show cause notice was issued to it and without such materials, it may not be possible for the appellant to give a proper reply. In these circumstances, this writ appeal stands disposed of directing the appellant or its authorized representative to appear before the officer who issued Ext.P7 show cause notice at the designated time on 22.02.2024. On that day, it is open to the appellant to file a request to give necessary details or materials which are required by it to give a proper reply to Ext.P7. The officer shall consider the said request and provide the details/materials sought for within a reasonable time. The appellant shall be given a further time of two weeks to reply to the show cause notice. Thereafter, the matter shall be adjudicated by the competent officer in accordance with law after giving sufficient opportunity of hearing to the appellant.