Case Law Details
Narayan Pradhan Vs Asst. Commissioner (Orissa High Court)
Orissa High Court recently set aside an order issued under Section 74(1) of the Central Goods and Services Tax (CGST) Act, 2017, citing a jurisdictional error. The case, Narayan Pradhan Vs Assistant Commissioner, revolved around a show-cause notice dated February 19, 2024, which alleged tax underpayment through misstatement. However, the petitioner, represented by Advocate Harichandan, argued that the notice lacked any explicit allegation of misstatement, rendering the invocation of the extended limitation period under Section 74(1) invalid.
Advocate Harichandan contended that the absence of specific allegations in the show-cause notice meant the authority acted beyond its jurisdiction, making the subsequent order legally untenable. He sought quashing of the order and interim protection during the proceedings. The respondent, represented by Senior Standing Counsel Mr. Satapathy, argued that there was clear evidence of the petitioner willfully applying a lower tax rate, which justified invoking the extended limitation period.
The court observed that the issue of jurisdictional error went to the core of the case. It emphasized that a show-cause notice under Section 74(1) must clearly articulate allegations such as misstatement or fraud to justify the extended period of limitation. In the absence of such allegations, the proceedings initiated under Section 74 become legally unsustainable. The court, therefore, deemed the petition worthy of a full hearing.
As a preliminary measure, the High Court stayed the impugned order until the next hearing, scheduled for February 21, 2025. This interim relief aims to safeguard the petitioner from adverse action while the matter is adjudicated. The case underscores the necessity of adhering to procedural requirements under tax law, particularly when invoking provisions that impose stricter consequences. This ruling reinforces the principle that statutory notices must explicitly detail allegations to uphold their validity under law.
FULL TEXT OF THE JUDGMENT/ORDER OF ORISSA HIGH COURT
1. Mr. Harichandan, learned advocate appears on behalf of petitioner and submits, impugned is show-cause notice dated 19th February, 2024 carrying purported finding of misstatement made by his client, to underpay the tax issued under sub-section (1) in section 74 of Central Goods and Services Tax Act, 2017. The provision was invoked to avail extended period of limitation but there was no allegation of misstatement in the show cause notice. As such, there has been jurisdictional error, which goes to root of impugned order. It be set aside on interference. He also seeks interim protection.
2. Mr. Satapathy, learned advocate, Senior Standing Counsel appears on behalf of revenue and submits, there is clear finding of the misstatement. Rate of tax was willfully applied at a lower rate. There be no interference.
3. Considering submission of jurisdictional error going to root of impugned order, there is requirement for the writ petition to be heard.
4. List on 21st February, 2025. Impugned order will remain stayed till next date of hearing.
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