Case Law Details
Baba Minerals Vs Union Of India (Rajasthan High Court)
The Rajasthan High Court addressed a writ petition filed by Baba Minerals challenging a show cause notice dated 31.07.2024 issued by the Deputy Director of the Directorate General of Goods and Services Tax Intelligence (DGGSTI), Jaipur Zonal Unit. The petitioner, a registered dealer under the GST Act, 2017, sought to quash the notice on the grounds that the DGGSTI lacks jurisdiction to act as an adjudicating authority for state-allocated cases, citing Section 6(1) of the GST Act. The petitioner claimed that the notice pertained to allegations of fake input tax credit (ITC) generation and cash transactions relying on fraudulent invoices.
The respondents argued that based on intelligence inputs, investigations, and searches, evidence suggested the petitioner’s involvement in such fraudulent activities. They further contended that under a circular dated 09.02.2018, DGGSTI officers were empowered to issue show cause notices. The High Court observed that the petitioner had challenged the notice without responding to it and that the issues raised required factual determination. The court dismissed the petition as premature, emphasizing that procedural steps, including filing a reply to the notice, must precede such legal challenges.
FULL TEXT OF THE JUDGMENT/ORDER OF RAJASTHAN HIGH COURT
1. This petition is filed seeking quashing of show cause notice dated 31.07.2024 bearing No. F. No. DGGI/INT/INTL/927/2023- GRA.
2. The brief facts are that the petitioner is a registered dealer under the Goods and Services Tax Act, 2017 (for short ‘the Act of 2017’). A show cause notice dated 31.07.2024 was issued by the Deputy Director, Office of Directorate General of Goods and Services Tax Intelligence, Jaipur Zonal Unit (for short ‘DGGSTI’). Hence, the present petition.
3. Learned counsel for the petitioner submits that the allocation of the petitioner is of the State jurisdiction. The Deputy Director of DGGSTI cannot be an Adjudicating Authority. Reliance is placed upon Section 6(1) of the Act of 2017.
4. Learned counsel for the respondent submits that as a result of the intelligence input received, investigation and the searches carried out, it was found that the petitioner is indulging in generating fake Input Tax Credits (ITC) by doing cash transactions and relying upon the fake invoices issued. The contention is that as per the circular dated 09.02.2018 the Central Tax Officers of Audit Commissionerate and DGGSTI shall have power to issue show cause notice.
5. The challenge in the present petition is only to the show cause notice. The allegations against the petitioner in the show cause notice are based upon the facts and needs factual determination.
6. The petitioner has filed this petition even without filing the reply to the show cause notice.
7. For determining the contention that DGGSTI cannot be adjudicating authority the writ is premature and is dismissed accordingly.
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