Case Law Details
Group M Media India Private Limited Vs Union Of India And Others (Punjab and Haryana High Court)
In the case of Group M Media India Private Limited Vs Union of India and Others, the petitioner challenged a show-cause notice issued under Section 74(1) of the CGST Act, 2017, in relation to an alleged tax evasion. Earlier, the respondents had issued a notice under Section 73 of the Act, but after the petitioner’s reply, the proceedings were dropped. The petitioner contended that the issuance of the Section 74 notice was improper, arguing that since the DGGI was already handling the matter, the notice should not have been issued. Additionally, the petitioner argued that the notice failed to specify any fraudulent intent or willful misstatements, which are necessary to substantiate a tax evasion case.
The Punjab and Haryana High Court, however, disagreed with the petitioner’s contentions. The Court upheld the issuance of the notice under Section 74, emphasizing that a notice under Section 73 does not preclude the authorities from initiating proceedings under Section 74. The Court also dismissed the petitioner’s argument about parallel proceedings, noting that the proceedings under Section 74 had been initiated independently by the Haryana State GST authorities. The notice accused the petitioner of availing excess Input Tax Credit (ITC), which was allegedly not supported by corresponding tax liabilities reflected in the vendor’s GSTR-1, suggesting that the tax was not deposited in the government treasury. The Court found the show-cause notice to be properly issued, with clear allegations of fraud, and dismissed the writ petition as misconceived, asserting that the petitioner should respond to the notice rather than bypassing the statutory process through a writ.
FULL TEXT OF THE JUDGMENT/ORDER OF PUNJAB AND HARYANA HIGH COURT
1. Learned senior counsel for the petitioner assails the show cause notice issued to him under section 74(1) of the CGST Act, 2017 (for short ‘the Act’) read with section 20 of the IGST Act, 2017.
2. Learned senior counsel submits that earlier the respondents had issued notice under section 73 of the Act to the petitioner, and after the reply was filed, the proceedings were dropped by the respondents vide order dated 28.02.2023 . With the same regard, the office of the DGGI had also issued notices to the petitioner to which the petitioner had submitted its reply.
3. Learned senior counsel submits that while the DGGI was seized with the matter, the notice under section 74 of the Act could not have been issued to the petitioner. Further, he also argues that the show cause notice issued under section 74 of the Act does not reflect and point out as to what manner of concealment of tax has been done by the petitioner. It is his submission that as per section 74 o f the Act, the show cause notice should point out as to what are the incriminating allegations against the petitioner and as to how the petitioner has attempted a fraud to evade tax, any willful mis -statement to evade tax, or suppression of facts to evade tax.
4. He relies on judgment passed by the Supreme Court in the case of Raj Bahadur Narain Singh Sugar Mills Ltd. vs. Union of India and others, reported in (1997) 6 SCC 81 , which has been followed by the Allahabad High Court in HCL Infotech Ltd. vs. Commissioner, Commercial Tax and another, 2024 (9) TMI 1644 . In support of his submissions, he has taken us to para Nos.22, 23, 24 and 25 of the concerned judgment of the Allahabad High Court.
5. We have carefully considered his submissions and find that the contentions raised by the petitioner are wholly misconceived. Issuance of notice under section 73 of the Act and dropping the same would not prevent the authorities from independently initiating proceedings under section 74 of the Act. The said proposition has also been accepted by the Allahabad High Court in HCL Infotech Ltd. (supra).
6. So far as the question raised by the petitioner with regard to parallel proceedings being conducted by the DGGI and the Haryana State GST Intelligence Unit as well as Assistant Commissioner, CGST is concerned, we find that while the Assistant Commissioner, CGST issued a letter dated 10.03.2023 to the petitioner requesting him to deposit the tax liability, the office of the DGGI only issued notice seeking certain queries. However, none of the authorities, either of the CGST or the DGGI have proceeded or initiated proceedings under section 74 of the Act.
7. We find that the notice under section 74 of the Act has only been issued to the petitioner by the Haryana State Tax (SGST), vide its impugned notice dated 03.08.2024. Along with summary of show cause notice, the grounds have been detailed in the first para which , for the reference of the present case, reflects as under:
“1. On review of GSTR 9 and GSTR 2A, it has been noticed that the taxpayer has availed excess ITC to the tune of Rs.8,84,57,976/– under head IGST and Rs.23,44,08,735/–in CGST and Rs.23,43,95,663/– under SGST in GSTR -3B on being compared to I’I’C appearing in GSTR – 2A. Same is evident from Table 8D of GSTR –9. Since, the vendor has not declared his tax liability in GSTR-1 due to which ITC is not appearing in GSTR –2A, therefore, this creates an impression that the vendor of taxpayer has not deposited tax liability in government treasury. Due to this reason, the recipient i.e. taxpayer has not fulfilled condition of section 16(2) (c) of CGST/HGST Act, 2017. You are hereby Show Caused as to why said amount of tax/ITC along with applicable interest under section 50(3) of the CGST/SGST Act, 2017 and penalty under section 74 of the CGST/SGST Act, 2017 should not be recovered.”
8. From the aforesaid, it is apparent that the allegations against the petitioner are that while he is stated of having availed excess to the tune of 8,84,57,976/- under head IGST ; Rs.23,44,08,735/- in CGST and Rs.23,43,95,663/- under SGST, however, same is not appearing in GSTR- 2A which reflects that the taxpayer has not deposited the tax liability in the Government treasury and has availed the same wrongfully. Resultantly, the notice has b een issued to the petitioner.
9. The petitioner, however, instead of filing reply to the show cause notice, directly approached this Court assailing the said show cause notice in the writ petition. The proceedings under section 74 of the Act are comprehensively and completely laid down under the provisions of the Act, and this Court would not in any manner cause hindrance in the disposal of the proceedings.
10. The writ petition cannot be entertained for the said purposes, more so when prima facie the show cause notice specifically reflects the allegations which the tax authorities feel to reflect of a fraud having been committed by the petitioner. The case and facts of HCL Infotech Ltd. (supra) are found to be different from the present case and it cannot be said that the notice does not reflect the allegations.
11. Writ Petition is found to be wholly misconceived and is accordingly dismissed.
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