Case tittle | Kiran Enterprise VS State Of Tripura |
court | Tripura high court |
Honourable judge | Justice S. Talapatra Justice S.G. Chattopadhyay |
Citation | 2020 (12) GSTPanacea 69 HC Tripura Wp(C). No. 114 Of 2020 |
Judgment date | 17-December-2020 |
The petitioner, a sole proprietorship firm, has initiated legal action under Article 226 of the Constitution of India, contesting two primary orders: one issued on 15th November 2018 and another communicated on 17th December 2019. Additionally, the petitioner contends that defects in a show cause notice dated 10th October 2018 render it unsustainable. The petitioner operates as a distributor for Airtel, engaged by Bharati Hexacom Limited for the Dharmanagar jurisdiction. This contractual arrangement is acknowledged by all parties involved.
The crux of the dispute lies in Clause 5.7 of the agreement dated 30th October 2010, under which the petitioner is obligated to pay all taxes, duties, levies, cess, search charges, or any other applicable charges related to distributorship or prepaid/service offerings/products. According to the petitioner,
The petitioner, a sole proprietorship firm, has initiated legal proceedings under Article 226 of the Constitution of India to challenge two key orders: one dated 15.11.2018 and another communicated on 17.12.2019. Additionally, they contend that the defects in the showcause notice dated 10.10.2018 make it untenable. The petitioner operates as a distributor for Airtel under Bharati Hexacom Limited within the Dharmanagar jurisdiction, a fact undisputed in this case.
The crux of the matter revolves around the petitioner’s obligation, as per Clause-5.7 of their agreement dated 30.10.2010 with Bharati Hexacom Limited, to pay all applicable taxes, duties, levies, and charges related to their distributorship. Initially, tax invoices were issued in the name of M/s New Kiran Enterprise, another firm owned by the petitioner.
A significant event occurred on 04.09.2012, when a search conducted under Section 67(2) of the Tripura State Goods and Services Act, 2017 (TSGST Act, 2017), revealed discrepancies in tax utilization. It was found that the taxpayer, M/s Kiran Enterprise, had wrongly availed excess Input Tax Credit (ITC) for IGST, CGST, and SGST.
Subsequently, on 04.09.2018, tax invoices were seized by the Superintendent of State Tax, Dharmanagar, under due authorization as per Section 67(1) of the TSGST Act. During the seizure, Ajit Kumar Deb, the proprietor’s son, was present. Following this, a notice under Section 74(1) of the TSGST Act was issued to the petitioner, alleging offenses under Sections 12(2)(c) and (d) of the TSGST Act.
The petitioner’s challenge encompasses the legality and validity of these actions, highlighting procedural errors and disputing the interpretation of relevant statutory provisions. This case underscores the complexities and implications of tax compliance and enforcement within the Indian legal framework, particularly concerning GST regulations and distributorship agreements.
This petition, filed under Article 226 of the Constitution of India, involves a sole proprietorship firm challenging two key orders: one dated 15.11.2018 and the other contained in a communication dated 17.12.2019. Additionally, the petitioner argues that defects/errors in a showcause notice dated 10.10.2018 render it unsustainable. The petitioner acts as a distributor for Airtel, appointed by Bharati Hexacom Limited for Dharmanagar jurisdiction.
The petitioner acknowledges its obligation, as per Clause-5.7 of the agreement dated 30.10.2010, to pay taxes, duties, and other charges applicable to its distributorship. Initially, tax invoices were prepared in the name of another firm owned by the petitioner. However, a search conducted on 04.09.2012 under Section 67(2) of the Tripura State Goods and Services Act, 2017 (TSGST Act), revealed discrepancies in tax utilization.
Following this search, tax invoices were seized, and a notice was issued under Section 74(1) of the TSGST Act, alleging wrongful utilization of Input Tax Credit (ITC) and tax evasion. The notice demanded payment of Rs.20,03,893.80 along with interest and penalties. The petitioner replied, explaining the existence of two sole proprietorship firms dealing in similar products but with separate GST numbers. The petitioner assured that the excess ITC claimed would be adjusted by their auditor, and annual returns were submitted.
Despite the petitioner’s explanation, an order was passed on 15.11.2018, which the petitioner challenges. The crux of the petitioner’s argument lies in the contention that no penal action should be taken under Clause (c) of Section 122(3) of the TGST Act.
In summary, the petitioner contests two orders and a showcause notice, arguing against penal action under tax laws. The case revolves around alleged discrepancies in tax utilization and the petitioner’s compliance with tax regulations.
The petitioner, a sole proprietorship firm, has brought forth a legal challenge under Article 226 of the Constitution of India, contesting two key decisions: an order dated 15.11.2018 and a subsequent communication dated 17.12.2019. Additionally, the petitioner argues that defects in the showcause notice dated 10.10.2018 render it unsustainable. The petitioner operates as a distributor for Airtel under an agreement with Bharati Hexacom Limited for the Dharmanagar jurisdiction, wherein it is obliged to pay various taxes, duties, and charges as stipulated in the agreement.
The crux of the petitioner’s argument revolves around the tax invoices issued in the name of M/s New Kiran Enterprise, another proprietorship firm owned by the petitioner. A search conducted under Section 67(2) of the Tripura State Goods and Services Tax Act, 2017 (TSGST Act, 2017) revealed discrepancies in the utilization of Input Tax Credit (ITC), leading to the seizure of tax invoices by the Superintendent of State Tax, Dharmanagar. This seizure prompted a notice under Section 74(1) of the TSGST Act, demanding explanation for the alleged wrongful utilization of ITC, suppression of facts, and failure to issue tax invoices.
In response, the petitioner asserted ownership of two sole proprietorship firms dealing in similar products, with identical PAN numbers but separate GST numbers. The petitioner’s contention was that the excess ITC claimed would be adjusted by their auditor and was already under process, thereby requesting leniency in penal action under Clause (c) of Section 122(3) of the TGST Act.
The Superintendent of State Tax, Dharmanagar, considered this reply and issued the contested order dated 15.11.2018, which is the primary subject of challenge in the writ petition. In this order, the Superintendent made observations regarding the petitioner’s submissions and presumably took further action, prompting the petitioner to seek legal redress through the writ petition.
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