Case Law Details
Bedi And Bedi Associates Vs Commissioner of CGST Delhi Audit-1 & Anr (Delhi High Court)
Introduction: The Delhi High Court recently rendered a significant judgment in the case of Bedi And Bedi Associates Vs Commissioner of CGST Delhi Audit-1 & Anr. The petitioner sought to challenge the Corrigendum and Show Cause Notice issued by the authorities. The central issue revolved around the approval of the Corrigendum by the Monitoring Committee.
Detailed Analysis:
1. Exemption Claim: The petitioner had initially claimed exemption from GST for supplies to a Polytechnic, citing Notification No. 12/2017-Central Tax (Rate) dated 28.06.2017.
2. Audit Observations: The Audit-1 authority issued Final Audit observations on 07.06.2023, disputing the petitioner’s eligibility for the claimed exemption.
3. Quantification of Demand: The original demand, based on the audit, amounted to ₹49,16,111/-. The Monitoring Committee approved these observations.
4. Subsequent Corrigendums: Two corrigendums, dated 25.08.2023 and 28.08.2023, were issued, altering the demand. This was followed by a Show Cause Notice on 11.09.2023.
5. Petitioner’s Challenge: The petitioner contended that the corrigendums were not approved by the Monitoring Committee, forming the basis for their legal challenge.
6. Court’s Evaluation: The court examined the premise of the petition, noting that alterations due to computational errors might not require specific approval.
7. Committee Approval Confirmed: The respondent’s counsel asserted that the impugned corrigendums were indeed presented to and approved by the Monitoring Committee on 17.08.2023.
8. Court’s Decision: The court dismissed the petition, finding the petitioner’s premise factually incorrect. It ruled that the corrigendums were approved by the Monitoring Committee.
Conclusion: In conclusion, the Delhi High Court’s judgment clarifies that alterations in tax amounts due to computational errors may not necessitate explicit approval by the Monitoring Committee. The petitioner’s challenge, based on the incorrect premise of non-approval, was dismissed by the court. This ruling underscores the importance of accurate factual assertions in challenging tax-related decisions.
FULL TEXT OF THE JUDGMENT/ORDER OF DELHI HIGH COURT
1. The petitioner has filed the present petition, inter alia, praying as under:
“(a) quash and set aside Corrigendum dated 25.08.2023 to ADT-02 dated 07.06.2023 as issued by Respondent No 2;
(b) quash and set aside Corrigendum dated 28.08.2023 TO DRC – 01A dated 04.07.2023 as issued by Respondent No 2;
(c) quash and set aside Show Cause Notice dated 11.09.2023 as issued by Respondent No 2; and
(d) pass such other order or orders as may be deemed fit and proper in the interest of justice.”
2. The petitioner had availed of exemption from payment of Goods and Services Tax (GST) in respect of outward supplies made to a Polytechnic (Vocational Institution) in terms of Notification No. 12/2017-Central Tax (Rate) dated 28.06.2017.
3. In the aforesaid background, the Superintendent, Group-54, CGST, Audit-1, Commissionerate, New Delhi, had issued a letter dated 07.03.2023 requesting the petitioner to provide the specific notification number, under which the exemption was claimed as well as the details of the outward supplies.
4. The petitioner responded to the said letter on 09.03.2023.
5. Thereafter, on 07.06.2023, Final Audit observations (ADT-02) was issued by the respondents. The gist of the observations indicates that the concerned authority was of the view that the petitioner was not entitled to exemption under the Notification No. 12/2017. According to the concerned authority, supplies made to a Polytechnic could not be considered as supplies to an educational institution.
6. According to the observations, GST of the sum amounting to ₹49,16,111/- alongwith interest and penalty was payable by the petitioner. The said observations were approved by the Monitoring Committee.
7. However, thereafter, two corrigendums were issued – Corrigendum dated 25.08.2023 and Corrigendum dated 28.08.2023 (hereafter ‘impugned corrigendums’) and the demand raised was amended. These were followed by a Show Cause Notice dated 11.09.2023 (hereafter ‘impugned SCN’), issued under Section 74 of the Central Goods and Services Tax Act, 2017 (CGST Act), alleging that a sum of ₹1,79,56,485/-was recoverable from the petitioner for wrongfully availing the exemption along with interest and penalty.
8. The petitioner has not responded to the impugned SCN as yet, but has approached this Court impugning the impugned corrigendums dated 25.08.2023 and 28.08.2023 as well as the impugned SCN.
9. The present petition is premised on the basis that the impugned corrigendums were not approved by the Monitoring Committee.
10. A plain reading of the final audit observations, as approved by the Monitoring Committee, indicates that the demand was founded on the basis that the petitioner was not entitled to the benefit of the Notification No. 12/2017-Central Tax (Rate) dated 28.06.2017. The impugned corrigendums only purported to correct the quantification of the tax recoverable on the aforesaid basis. Any alteration in the amount of tax on account of a computational error may not require specific approval of the Monitoring Committee.
11. Prima facie, the impugned corrigendums or the impugned SCN are not liable to be set aside on the aforesaid ground.
12. Mr. Harpreet Singh, learned counsel who appears for the respondents on advance notice, states on instructions that the present petition is based on a factually incorrect premise that the impugned corrigendums were not approved by the Monitoring Committee. He submits that the impugned corrigendums were placed before the Monitoring Committee at a meeting held on 17.08.2023 and were specifically approved.
13. In view of the above, the premise on which the present petition is founded, does not hold good.
14. The petition is, accordingly, dismissed. All pending applications are also disposed of.
