Case Title | Liberty Clothing Company Vs The Union Of India |
Court | Madras High court |
Honorable Judges | Justice Abdul Quddhose |
Citation | 2023 (02) GSTPanacea 315 HC Madras W.P. No.2924 of 2023 and W.M.P. Nos.3023 and 3025 of 2023 |
Judgement Date | 03- February -2023 |
In the given scenario, the petitioner argues that the respondents have violated the provisions of Sections 42(3) and 43-A of the Goods and Services Tax (GST) Act, 2017. These sections stipulate that the respondents must conduct inquiries involving both the buyer and the seller when discrepancies or issues arise.
The petitioner contends that the respondents have failed to adhere to these legal requirements by issuing a show cause notice solely to them (the petitioner), thereby neglecting the necessity to also investigate the seller. This, according to the petitioner, constitutes arbitrary and illegal action on the part of the respondents.
Furthermore, the petitioner asserts that the respondents have acted with a predetermined mindset, as evidenced by the manner in which the show cause notice was issued. The petitioner believes that the respondents have already reached a conclusion without a fair and thorough inquiry involving both parties as mandated by the law. This predetermined stance undermines the principles of natural justice and fairness, rendering the show cause notice unjust and prejudicial to the petitioner.
The petitioner argues that the respondents have not complied with Sections 42(3) and 43-A of the GST Act 2017. These sections mandate that any enquiry regarding discrepancies in input tax credit (ITC) must involve both the buyer (the petitioner in this case) and the seller. The petitioner contends that issuing a show cause notice solely to the buyer, without involving the seller, is arbitrary and illegal. The petitioner also claims that the respondents have already made a predetermined decision in the impugned show cause notice, indicating a lack of impartiality and fairness in the process.
To support their argument, the petitioner’s learned counsel refers to various legal authorities. These authorities assert that any enquiry under the GST Act must involve both parties – the buyer and the seller – to ensure due process and a fair investigation. By not issuing notice to the seller, the respondents are not adhering to the statutory requirements, which could render the entire enquiry process invalid.
In essence, the petitioner’s main contention is that the procedural lapses by the respondents, namely not involving the seller in the enquiry, violate the provisions of the GST Act. This not only makes the show cause notice arbitrary and illegal but also suggests a biased approach by the respondents. The petitioner relies on established legal precedents to emphasize that both parties should be notified and involved in the enquiry to uphold the principles of natural justice and ensure a fair and transparent investigation.
In this case, the petitioner claims that the respondents have violated Sections 42(3) and 43-A of the GST Act 2017. These sections stipulate that an enquiry should involve both the buyer (the petitioner) and the seller. The petitioner argues that the show cause notice issued solely to them is arbitrary and illegal, suggesting that the respondents have already made a predetermined decision in the notice.
The petitioner’s learned counsel relies on several authorities to support the argument that the enquiry must involve both parties. The specifics of these authorities were not detailed in the summary but are implied to strengthen the petitioner’s position.
During the proceedings, Mr. R. Senniappan, the counsel for the petitioner, presented their case. Mr. T. Ramesh Kutty, the standing counsel, accepted the notice on behalf of respondents 1 and 3, while Mrs. K. Vasantha Mala, the government advocate, accepted the notice on behalf of the second respondent.
1.Background and Petitioner’s Argument
The petitioner contends that the respondents have failed to adhere to the provisions of Sections 42(3) and 43-A of the GST Act 2017. These sections stipulate that both the buyer and the seller must be involved in the enquiry process. The petitioner argues that issuing a show cause notice solely to them, without involving the seller, is arbitrary and illegal. They assert that the respondents have predetermined the outcome of the issue, making the show cause notice unjust.
2.Authorities Cited by the Petitioner
The petitioner supports their contention by citing various legal authorities, arguing that the respondents are required to conduct an enquiry by notifying both the buyer and the seller. These authorities underline the necessity of involving both parties to ensure a fair and thorough investigation.
3.Respondents’ Position
Mr. R.Senniappan, the petitioner’s learned counsel, presented the case, while Mr. T.Ramesh Kutty and Mrs. K.Vasantha Mala represented the respondents. Mr. Kutty, representing respondents 1 and 3, submitted that the Central Authority has communicated to the State Authority the need to issue a notice to the supplier from whom the petitioner purchased the goods. He emphasized that any further proceedings would follow the procedure established under the CGST Act 2017. He also argued that the present writ petition is not maintainable, as it challenges the show cause notice itself rather than following the procedural steps outlined in the GST Act.
4.Conclusion
In essence, the petitioner’s main argument is that the show cause notice is arbitrary and illegal because it does not involve the seller, violating Sections 42(3) and 43-A of the GST Act 2017. On the other hand, the respondents maintain that the correct procedure is being followed and that the petitioner’s writ petition is premature and not maintainable. The matter revolves around whether the respondents have followed the procedural requirements of notifying both the buyer and the seller before initiating further proceedings.
The petitioner’s counsel relies on specific legal authorities to support the argument that the respondents must conduct an enquiry involving both the buyer and the seller. The petitioner’s legal representatives have presented this argument during a hearing, where Mr. R. Senniappan represented the petitioner. Mr. T. Ramesh Kutty, the learned Standing Counsel, represented respondents 1 and 3, and Mrs. K. Vasantha Mala, the learned Government Advocate, represented the second respondent.
The Standing Counsel for respondents 1 and 3 argued that the Central Authority had already communicated to the State Authority that notice should be sent to the supplier from whom the petitioner purchased the goods. He emphasized that the proceedings will be conducted according to the procedures established under the CGST Act 2017. He also argued that the writ petition is premature and not maintainable because the petitioner has challenged the show cause notice without first submitting a detailed reply to it. According to him, the issues raised by the petitioner should be addressed after they submit their reply to the notice, not before.
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