Case Law Details
Nestle India Limited Vs Union of India (Gujarat High Court)
Introduction: Nestle India Ltd. has secured interim relief from the Hon’ble Rajasthan High Court against the second show cause notice issued under the CGST Act. The challenge was based on multiple grounds, and the court’s decision marks a significant development in the ongoing legal battle between Nestle India and the Union of India.
Detailed Analysis:
Challenge under Section 65(7) CGST Act: Nestle’s legal counsel argued that under Section 65(7) of the CGST Act, only one ‘proper officer’ should apply their mind to the Audit Report for issuing a show cause notice. The contention was that no other officer should act upon the Audit Report after the issuance of a notice.
Unity of the Audit Report: The legal team emphasized that the Audit Report is a single document and should not be divided into individual audit paras for the purpose of issuing show cause notices. Nestle asserted that the consolidation of the Audit Report should result in a single show cause notice.
Limitation on Show Cause Notices: Nestle’s third ground of challenge focused on the idea that only one show cause notice should be issued in connection with a consolidated Audit Report. This argument aimed to prevent the issuance of multiple notices based on a single audit report.
Court’s Appreciation and Interim Relief: The Hon’ble Rajasthan High Court acknowledged the merit in Nestle India’s arguments and granted interim relief by staying the adjudication proceedings related to the contested second show cause notice. This order serves as a temporary halt until further legal proceedings take place.
Conclusion: In the ongoing legal battle between Nestle India Ltd. and the Union of India, the recent interim relief granted by the Hon’ble Rajasthan High Court is a crucial development. The court’s decision to stay the adjudication proceedings indicates a favorable response to Nestle’s arguments regarding the interpretation of Section 65(7) of the CGST Act. The matter is set for further consideration on January 30, 2024, and until then, the proceedings related to the second show cause notice remain stayed. This decision will likely have implications for how Audit Reports are utilized in the context of GST proceedings, setting a precedent for similar cases in the future.
FULL TEXT OF THE JUDGMENT/ORDER OF GUJARAT HIGH COURT
1. Pursuant to the order dated 04.12.2023, the Additional Commissioner, CGST, Jaipur has passed the order relating to the jurisdiction and has come to the conclusion that he has the jurisdiction to issue the show-cause notice.
2. Miscellaneous application (01/2023) has been filed by the respondents to place the said order on record.
3. The application No.01/2023 is allowed. Order dated 12.2023 is taken on record.
4. Learned counsel for the petitioner with reference to the order dated 13.12.2023 passed by the authority on the aspect of jurisdiction, made submissions that the determination made is contrary to the language of the Section 65 (7) of the Central Goods and Services Tax Act, 2017 (‘the Act’) inasmuch as if the said determination is accepted, the same would result in issuance of multiple show-cause notices based on one single audit report.
5. With reference to the definition of ‘Proper Officer’ under Section 2(91) of the Act and notification dated 10.02.2019 (Annexure-4), submissions have been made that only one notice based on the audit report as per the monetary limit involved in the said show-cause notice could be issued and as in the present case, notice dated 17.08.2023 (Annexure-2) had already been issued by the Superintendent, the notice dated 25.09.2023 (Annexure-1) could not be issued by the Additional Commissioner, CGST.
6. Learned counsel for the respondents prays for time to file reply to the writ petition and made submissions that the determination made on the jurisdiction by the authority is justified as the language of Section 65 (7) of the Act cannot be confined to issuance of one single notice and that based on each paragraph of the audit report, a separate show-cause notice by the Jurisdictional Officer can be issued.
7. Matter requires consideration.
8. Issue notice. Issue notice of the stay application also.
9. List the matter on 30.01.2024.
10. In the meanwhile and till the further order, proceedings pursuant to the show-cause notice dated 25.09.2023 (Annexure1) before the Additional Commissioner, CGST, Jaipur shall remain stayed.
11. As the order is passed in the presence of learned counsel for the respondents, they would be free to seek vacation of the interim order after filing of the reply to the petition.
