Sh. Bhupender Kumar Proprietor of M/S Dabas Construction Co. Vs Commissioner (Delhi High Court)
The Delhi High Court considered a challenge to a GST show cause notice dated 29 December 2023 on the ground that it violated Sections 75(6) and 75(7) of the CGST Act, 2017 because it did not specify the proposed demand towards interest and penalty. The petitioner argued that in the absence of such particulars, the notice was contrary to the statutory mandate and the respondents could not recover interest and penalty.
The respondents contended that where Input Tax Credit (ITC) has been wrongly availed or reversed belatedly, liability towards interest and penalty follows in accordance with law. According to the respondents, the ITC availed for FY 2018-19 was hit by Section 16(4) of the CGST Act and should have been reversed earlier, whereas the petitioner reversed the amount only in December 2023 after approximately four years.
The Court observed that under Sections 75(6) and 75(7), the term “amount” includes tax, interest and penalty mentioned in the show cause notice. However, the Court held that mere non-mention of the specific amount of interest and penalty would not by itself render the show cause notice illegal.
At the same time, the Court clarified that respondents should mention the proposed interest amount to be recovered, the applicable rate of interest, and the proposed penalty in the show cause notice.
