Case Law Details
Hero Motocorp Limited Vs Union of India (Rajasthan High Court)
In a recent ruling, the Rajasthan High Court dismissed a writ petition filed by Hero Motocorp Limited, challenging a GST show-cause notice issued on August 3, 2024. The company argued that the notice, which proposed an increase in GST from 18% to 28%, was unjust, particularly as other manufacturers in similar circumstances had not received such notices. The petitioner contended that this drastic increase in tax rates could jeopardize their operations, potentially leading to substantial financial losses. They further asserted that the issuance of the notice violated established guidelines from the Central Board of Indirect Taxes and Customs (CBIC), which mandate prior consultation with the Board and the GST Council before altering tax interpretations.
However, the court ruled against the petition, stating that the challenge to a show-cause notice through a writ petition was not permissible under the law. The court noted that Hero Motocorp retains the right to respond to the notice, and any subsequent order will follow the legal process outlined in the Central Goods and Services Tax Act (CGST Act), including an opportunity for a hearing. The court referenced prior judgments, affirming that simply receiving a show-cause notice does not warrant judicial intervention at that stage. Therefore, the court upheld the legality of the notice, allowing Hero Motocorp to address the concerns through appropriate legal channels while emphasizing that any final decisions made would remain subject to appeal.
FULL TEXT OF THE JUDGMENT/ORDER OF RAJASTHAN HIGH COURT
1. The petitioner has filed this writ petition interalia challenging the show-cause notice in Form GST DRC-01 dated 03.08.2024.
2. It is contended by learned Senior Advocate appearing for the petitioner that all the other manufacturers who are similarly situated to the petitioner have not been issued such show-cause notice. The petitioner and all other similarly situated manufacturers have been paying GST @18% since 2017, however, vide notice dated 03.08.2024, the respondents seek to levy GST @28%. It is contended that if the GST is levied @28%, the same would result in closure of the establishment of the petitioner-company, as its similarly situated counterparts would get the benefit. It is also contended that circulars have been issued by the Central Board of Indirect Taxes and Customs wherein, it is mandated that before issuing any show-cause notice if there is any change in the interpretation of some issue pertaining to the prevalent trade practice, the same would be referred to the Board. It is further contended that the show-cause notice has been issued without referring the matter to the Board as well as GST Counsil and without obtaining advance ruling.
3. Mr. Sandeep Pathak, learned counsel appearing on behalf of the respondents No.1, 3 and 4 has opposed the writ petition. It is contended that the show-cause notice cannot be challenged by way of writ petition. It is contended that the petitioner has right to file reply to the show-cause notice and any order passed, would have been passed after affording an opportunity of hearing to the petitioner under Sections 73, 74 and 75 of the Central Goods and Services Tax Act, 2017 (for short ‘the CGST Act’). Learned counsel for the respondents has placed reliance on the judgment passed in the case of Union of India & Ors. Vs. Coastal Container Transporters Association & Ors. : (2019) 20 SCC 446 which was the case under the Excise and Customs Act. It is contended that in the CGST Act also if any order is passed, appeal of the same lies to the Hon’ble Apex Court, which fact is not disputed by learned Senior Counsel appearing for the petitioner.
4. It is argued that show-cause notice cannot be made subject matter of the writ petition as held by the Division Bench of this Court in the case of M/s. Global One Resources LLP Vs. Deputy Commissioner, SGST & Ors.: D.B. Civil Writ Petition No.18424/2022 decided on 17.01.2023.
5. We have considered the submissions.
6. The main grievance of the petitioner is that by issuing show-cause notice, the respondents want to levy GST @28% instead of prevalent GST @18%, which the petitioner and his counterparts have been paying since 2017. Such levy of additional 10% GST would result in payment of thousand crores of tax, which will seriously hamper the business of the petitioner-company.
7. We are of the considered view that merely because petitioner has been given notice and his counterparts have not been given notice, the same cannot said to be bad in law. We are also of the view that merely on issuing of the show-cause notice, writ jurisdiction cannot be invoked for the very reason that the petitioner has right to file reply to the show-cause notice and as per the CGST Act, they have a right to be heard before any order is passed on the show-cause notice. Further, any order passed by the authorities is appealable.
8. In view of the above, we find no force in the writ petition and the same deserves to be and is accordingly, dismissed.
9. However, the petitioner is free to file reply to the representations and the respondents are required to act in accordance with law while dealing the representations.
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