Case Law Details
Maheshwari Logistics Limited Vs State of Gujarat & Anr. (Gujarat High Court)
In the case of Maheshwari Logistics Limited Vs State of Gujarat, the Gujarat High Court addressed a challenge to show cause notices and an order issued by the respondent under the Goods and Services Tax (GST) Act for the financial year 2017-18. The petitioner, engaged in logistics and paper manufacturing, had been issued show cause notices on 24.11.2023 and 28.12.2023 alleging wrongful Input Tax Credit (ITC) availed from a non-existent firm. The petitioner contended that these notices were effectively final orders, as the tax liability had been predetermined, and they were issued without providing an opportunity for a hearing, violating Section 75(4) of the GST Act. The Court found that the respondent had pre-determined the demand, making the notices unsustainable in law. As a result, the Court quashed both the show cause notices and the final order dated 29.12.2023. The matter was remanded to the respondent for initiating fresh proceedings and issuing new notices in compliance with the law within twelve weeks.
FULL TEXT OF THE JUDGMENT/ORDER OF GUJARAT HIGH COURT
1. By this petition preferred under Articles 226 and 227 of the Constitution of India, the petitioner has prayed for the following main reliefs:-
“(a) That this Hon’ble Court may be pleased to issue a Writ of Mandamus or any other appropriate writ, order or direction, quashing and setting aside the Impugned Order dated 29.12.2023 passed by the Respondent No.2 at Annexure-J.
(b) That this Hon’ble Court may be pleased to issue a writ of Mandamus or any other appropriate writ, order or direction, quashing the Show Cause Notices dated 24.11.2023 and 28.12.2023 issued by the Respondent No.2 at Annexure-E and Annexure-I respectively.
2. The brief facts of the case are as under :-
2.1 The petitioner is engaged in the business of providing logistics services, supplying of non-coking coal and manufacturing of kraft paper and trading in variety of papers and was registered under the Gujarat Goods and Services Tax, 2017 (hereinafter referred to as the “GGST Act”). That, pursuant to the issuance of registration certificate, as per the mandate contained under the provisions of the GGST Act, the petitioner has regularly filed monthly and quarterly returns till the date.
2.3 The respondent No.2 had initiated an investigation against the petitioner, in connection to which summons dated 23.06.2023 was issued to the petitioner. The respondent No.2 had issued another summons on 04.07.2023, in relation to which petitioner had submitted the requisite documents vide letter dated 24.07.2023 and had also deposed a statement before the respondent No.2 on 12.07.2023. The respondent No.2 issued FORM DRC-01A on 26.09.2023 under Section 74(5) of the GGST Act intimating the petitioner to discharge the outstanding tax liability for the Financial Year 2017-18 amounting to Rs.42,87,353/- (Rupees Forty Two Lakhs Eighty Seven Thousand Three Hundred Fifty Three Only) Rs.8,12,504/- (Rupees Eight Lakhs Twelve Thousand Five Hundred Four Only) towards CGST, Rs.8,12,504/- (Rupees Eight Lakhs Twelve Thousand Five Hundred Four only) towards SGST, Rs.3,12,840/- (Rupees Three Lakhs Twelve Thousand Eight Hundred Forty only) towards Cess, 20,58,827/- (Rupees Twenty Lakhs Fifty Eight Thousand Eight Hundred Twenty Seven Only) towards interest and Rs.2,90,678/- (Rupees Two Lakhs Ninety Thousand Six Hundred Seventy Eight Only) towards penalty.
2.3 The respondent No.2 alleged that the petitioner had availed wrongful ITC on the purchases made from a non-existent firm namely M/s. Magnifico Minerals Private Limited bearing GSTIN 24AAHCM6420G1ZP as its registration has been cancelled. The petitioner filed a reply under DRC-01A dated 28.09.2023 intimating that the ITC was rightly availed on the purchases made from M/s. Magnifico Minerals Private Limited. Further all practically possible documentary evidences were submitted by the petitioner.
3. Thereafter, the show cause notice dated 11.2023 was issued in FORM GST DRC-01 under Section 74 of the GST Act for the Financial Year 2017-2018 demanding the amount of Rs.60,19,222/- alleging that the petitioner had availed ITC from fictitious firm i.e. M/s. Magnifico Minerals Private Limited and had contravened the provisions of Section 16(2) of the GST Act.
4. The respondent No.2 thereafter issued another notice in Form DRC-01A dated 24.11.2023 for the Financial Year 2018-19 under Section 74(5) of the GST Act and subsequent to the reply filed by the petitioner on the similar grounds.
4.1 Subsequent to the reply filed by the petitioner on 30.11.2023, the show cause notice dated 28.12.2023 in FORM DRC-01 for the Financial Year 2018-19 was issued by the respondent No.2. The respondent No.2 thereafter, passed an order 29.12.2023 in FORM DRC-07 for the Financial Year 2017-18 without giving any opportunity of hearing to the petitioner as per Section 75(4) of the GST Act .
5. Being aggrieved the petitioner has preferred this petition challenging both the show notices as well as order dated 29.12.2023 passed by the respondent No.2 for the Financial Year 2017-2018 on the ground that the impugned show cause notices are in nature of final order and the order-in-original dated 29.12.2023 is passed without giving an opportunity of hearing.
6. The respondent-authority has thereafter issued the notice under Section 108 read with Rule 109 of the GST Act read with Rule 109B of the GST Rules for initiating the revisional proceedings for the Financial Year 2017-2018 on 8.10.2024, so as to give opportunity of hearing to the petitioner pursuant to the show cause notice issued for the said period.
7. Mr. Anandodaya Mishra, learned advocate for the petitioner invited the attention of this Court that the impugned show cause notices dated 24.11.2023 as well as dated 28.12.2023 and submitted that both the show cause notices are in nature of the final order. It was submitted that the respondent No.2 considering the reply filed by the petitioner in response to the notice in FORM DRC-01A has issued a formal show cause notice with the grounds determining the tax liability wherein, the tax liability is determined. It was submitted that the respondent No.2 has pre-determined its mind while issuing the show cause notice.
7.1 It was therefore submitted that both the show cause notices as well as the impugned order are liable to be quashed and set aside for giving an opportunity of hearing to the petitioner, so as to enable the respondent to issue the fresh show cause notice.
8. On the other hand, learned Assistant Government Pleader Ms. Shrunjal Shah appearing for the respondents-authorities submitted that so far as the show cause notice dated 24.11.2023 is concerned, the respondent No.2 has passed an order-in-original in FORM DRC-07 which is now sought to be taken into revision, so as to grant the opportunity of hearing to the petitioner and therefore, no interference is required to be made, so far as the proceedings emanating from the said show cause notice.
8.1. It was further submitted that so far as the the show cause notice dated 28.12.2023 for the Financial Year 2018-19 is concerned, the matter may be remanded back to the respondents- authorities to issue the fresh show cause notice in accordance with law.
9. On perusal of the show cause notices dated 11.2023 and 28.12.2023, it is apparent that the respondent No.2 has pre- determined the demand while issuing the show cause notice on the basis of the reply filed by the petitioner and pursuant to the intimation, the tax ascertained is payable under Section 75(4) of GST Act in FORM GST-DRC-01A. It is pertinent to note that in the grounds of show notice, there is no mention with regard to the word “ show cause notice” except on the front page FORM DRC- 01 is printed. Thus, we are of the opinion that the impugned show cause notices are issued by the respondent No.2 in form of the order- in-original which cannot be sustained in the eye of law.
10. Considering the submissions, we are of the opinion that both the show cause notices are worded identical based on the same facts and therefore, it would be in the interest of justice to quash the same and remand the matter back to the respondents-authorities. Consequently the order dated 12.2023 passed by the respondents also would not survive as show cause notice are quashed, so as to enable the respondent No.2 to issue the fresh show cause notice.
11. In view of the above foregoing reasons, the petition succeeds and accordingly allowed. The impugned show cause notices dated 24.11.2023 and 28.12.2023 as well as order dated 29.12.2023 passed by the respondent No.2 for the Financial Year 2017-2018 are hereby quashed and set The matter is remanded back to the respondent No.2 to initiate the fresh proceedings in accordance with law within a period of twelve weeks from the date of receipt of copy of this order.
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