Shivani Enterprise Vs Union of India & Ors. (Supreme Court of India)
Summary: The petitioner, engaged in trading of scrap, challenged proceedings arising from alleged fraudulent Input Tax Credit availed from M/s Ganpati Enterprises. Following intelligence received by the Department, a physical verification of the petitioner’s premises was conducted on 9 December 2020 under Section 67(1) of the CGST Act, and a panchnama was recorded. A Show Cause Notice dated 29 February 2024 in Form DRC-01 proposed penalties under Section 122(1)(vii) and Section 122(1)(xii), (xvi) and (xvii) of the CGST Act. The petitioner filed a reply and was granted a personal hearing, following which an Order in Original dated 30 August 2025 was served through the portal. Before the High Court, the petitioner contended principally that only three pages of the Show Cause Notice had been supplied and that, although six Relied Upon Documents (RUDs) were referred to, RUDs at serial numbers 4 to 6 had not been supplied. It was further contended that the RUDs referred to periods subsequent to cancellation of the petitioner’s registration with effect from 8 October 2020 and that the relevant period was not properly specified. The respondents disputed these allegations, maintaining that the complete Show Cause Notice had been dispatched and that the references to 2021 in the RUD list were inadvertent typographical errors, whereas the investigation and demand related to October 2018 to November 2019. The respondents also submitted that the relevant documents had been dealt with in the Order in Original and that the petitioner had participated in the proceedings without raising the alleged deficiency.
Read HC Judgment in this case: Typographical Error in GST SCN Not Ground to Quash Proceedings: Gujarat HC
High Court Proceedings and Ruling
Consideration of the Petitioner’s Objections
The High Court noted at the outset that an alternative efficacious statutory remedy of appeal was available under Section 107 of the CGST Act. Nevertheless, since the petitioner sought adjudication on the merits, the Court considered the principal objections. Regarding the allegation that only three pages of the Show Cause Notice had been received, the High Court found that the petitioner had been personally heard and had filed replies during the proceedings, but had not alleged in those replies that only three pages had been supplied. The respondents had also categorically denied the allegation and asserted that a physical copy had been dispatched to the petitioner. The High Court therefore declined to interfere on this ground, observing that the issue involved appreciation of facts and could appropriately be examined by the appellate authority.
Relied Upon Documents and Relevant Period
On the RUD issue, the High Court recorded the respondents’ explanation that the reference to the year 2021 in the Show Cause Notice was an inadvertent mistake and that the investigation and subsequent demand concerned October 2018 to November 2019, covering financial years 2018-19 and 2019-20. The Court noted that the Order in Original referred to and dealt with the relevant RUDs and that documents including GSTR-3B, GSTR-2B, GSTR-1M and e-way bills had been scrutinised. The High Court consequently held that the petitioner had been afforded sufficient opportunity of hearing and found no violation of the principles of natural justice or statutory provisions. It declined to exercise writ jurisdiction under Article 226 and rejected the writ petition.
Challenge Before the Supreme Court
The petitioner carried the matter to the Supreme Court by Special Leave Petition. Before the Supreme Court, the material controversy arose from the petitioner’s challenge to the High Court’s refusal to interfere with the Show Cause Notice and Order in Original despite the allegations concerning deficiencies in the Show Cause Notice and non-supply or incorrect description of RUDs. The Supreme Court heard the learned senior counsel appearing for the petitioner and considered the material on record.
Supreme Court Reasoning and Final Ruling
The Supreme Court declined to interfere with the High Court’s decision. It held that the High Court had rightly observed that the petitioner possessed an alternative statutory remedy by way of an appeal under Section 107 of the CGST Act. The Supreme Court, however, granted the petitioner four weeks’ time to prefer the statutory appeal before the Appellate Authority. Importantly, it clarified that the petitioner would be entitled to raise all submissions available in law before the Appellate Authority, including the alleged deficiencies in the Show Cause Notice. The Special Leave Petition was accordingly disposed of, with pending applications, if any, also disposed of.
Effect of the Supreme Court Decision
The Supreme Court did not undertake an independent determination of the merits of the petitioner’s objections concerning the Show Cause Notice or RUDs. Instead, it affirmed the High Court’s approach that the petitioner should pursue the statutory appellate remedy under Section 107 of the CGST Act. The High Court’s rejection of the writ petition therefore remained undisturbed, while the petitioner was expressly given four weeks to approach the Appellate Authority and to raise there all legally available contentions, including the alleged deficiencies in the Show Cause Notice.
FULL TEXT OF THE SUPREME COURT JUDGMENT/ORDER
1. Having heard the learned senior counsel appearing for the petitioner(s) and having gone through the materials on record, we are of the view that we should not interfere as the High Court has rightly observed that the petitioner has an alternative remedy of preferring a statutory appeal under Section 107 of the Central Goods and Service Tax Act, 2017 (for short “the CGST Act”).
2. We grant four weeks’ time to the petitioner to prefer the statutory appeal before the Appellate Authority. It shall be open for the petitioner to raise all submissions available to him in law, including deficiencies in the show cause notice.
3. With the aforesaid, the Special Leave Petition stands disposed of.
4. Pending application(s), if any, stands disposed of.
