Raymond Limited vs Union of India

1.This petition invoking writ jurisdiction of this Court under Article 226 of Constitution of India assails the show cause notice dated 03.09.2022 (Annexure P/2) and the subsequent order of demand dated 12.09.2022 (Annexure P/3) both issued u/s. 73 of the Central Goods and Services Tax Act, 2017 (for short “the CGST Act”).

2. Pertinently, this Court while taking cognizance of this matter on 01.12.2022 restrained the respondents from taking coercive steps against petitioner pursuant to impugned show cause notice (Annexure P/2) and impugned order of demand (Annexure P/3).

3.Learned counsel for rival parties are heard on the question of admission so also final disposal.

4. Shri Gopal Mundhra, learned counsel for petitioner has though pleaded several grounds but restricts his arguments to the ground of denial of reasonable opportunity arising from the fact that despite show cause notice dated 03.09.2022 (Annexure P/2) affording 30 days’ time for the petitioner to respond, the impugned order u/s. 73 was passed on 12.09.2022 i.e. within nine (9) days.

4.1 A further ground is raised that show cause notice dated 03.09.2022 (Annexure P/2) is not self-contained inasmuch as failing to inform about material of adverse nature which constituted the foundation of show cause notice thereby disabling the petitioner to respond. In this manner, it is urged that principle of audi alteram partem stood violated. Lastly, it is urged that opportunity of personal hearing was also not afforded.

4.2 This Court thus restricts its adjudicatory scrutiny to the aforesaid two grounds thereby leaving it to petitioner to raise the other ground not decided by this Court, if occasion arises; and, if law permits before the appropriate forum.

5. A bare perusal of show cause notice u/S. 73 of CGST Act reveals that the same was issued on 03.09.2022 affording opportunity to petitioner to make payment of tax with admissible penalty within 30 days. For ready reference and convenience, relevant Section 73 of CGST Act is reproduced below :

“73. Determination of tax not paid or short paid or erroneously refunded or input tax credit wrongly availed or utilised for any reason other than fraud or any wilful-misstatement or suppression of facts.-(1) Where it appears to the proper officer that any tax has not been paid or short paid or erroneously refunded, or where input tax credit has been wrongly availed or utilised for any reason, other than the reason of fraud or any wilful-misstatement or suppression of facts to evade tax, he shall serve notice on the person chargeable with tax which has not been so paid or which has been so short paid or to whom the refund has erroneously been made, or who has wrongly availed or utilised input tax credit, requiring him to show cause as to why he should not pay the amount specified in the notice along with interest payable thereon under section 50 and a penalty leviable under the provisions of this Act or the rules made thereunder.

(2) The proper officer shall issue the notice under subsection (1) at least three months prior to the time limit specified in sub-section (10) for issuance of order.

(3) Where a notice has been issued for any period under sub-section (1), the proper officer may serve a statement, containing the details of tax not paid or short paid or erroneously refunded or input tax credit wrongly availed or utilised for such periods other than those covered under sub-section (1), on the person chargeable with tax.

(4) The service of such statement shall be deemed to be service of notice on such person under sub-section (1), subject to the condition that the grounds relied upon for such tax periods other than those covered under subsection (1) are the same as are mentioned in the earlier notice.

(5) The person chargeable with tax may, before service of notice under sub-section (1) or, as the case may be, the statement under sub-section (3), pay the amount of tax along with interest payable thereon under section 50 on the basis of his own ascertainment of such tax or the tax as ascertained by the proper officer and inform the proper officer in writing of such payment.

(6) The proper officer, on receipt of such information, shall not serve any notice under sub-section (1) or, as the case may be, the statement under sub-section (3), in respect of the tax so paid or any penalty payable under the provisions of this Act or the rules made thereunder.

(7) Where the proper officer is of the opinion that the amount paid under sub-section (5) falls short of the amount actually payable, he shall proceed to issue the notice as provided for in sub-section (1) in respect of such amount which falls short of the amount actually payable.

(8) Where any person chargeable with tax under subsection (1) or sub-section (3) pays the said tax along with interest payable under section 50 within thirty days of issue of show cause notice, no penalty shall be payable and all proceedings in respect of the said notice shall be deemed to be concluded.

(9) The proper officer shall, after considering the representation, if any, made by person chargeable with tax, determine the amount of tax, interest and a penalty equivalent to ten per cent. of tax or ten thousand rupees, whichever is higher, due from such person and issue an order.

(10) The proper officer shall issue the order under subsection (9) within three years from the due date for furnishing of annual return for the financial year to which the tax not paid or short paid or input tax credit wrongly availed or utilised relates to or within three years from the date of erroneous refund.

(11) Notwithstanding anything contained in sub-section (6) or sub-section (8), penalty under sub-section (9) shall be payable where any amount of self-assessed tax or any amount collected as tax has not been paid within a period of thirty days from the due date of payment of such tax.”

(emphasis supplied)

5.1 The aforesaid provision of Section 73 is a part of Chapter XV relating to “Demand And Recovery”. Section 73 applies in cases other than cases of fraud or wilful misstatement or suppression of facts, for determination of unpaid /short paid tax or erroneous refund or wrongful availing or utilization of input tax credit.

5.2 Sub-section (1) of Section 73 stipulates service of notice on such person chargeable with tax not paid or short paid or being beneficiary of erroneous refund or wrongful availing or utilization of input tax. It further requires the show cause notice to specify the amount of unpaid tax. The amount of these omissions/commissions are subject to stipulation that the same would be charged with interest other than one chargeable u/s. 50 and levy of penalty in accordance with the Act and Rules framed thereunder.

5.3 A notice u/s. 73 (1) is mandated to be issued at least three months prior to the time limit specified in sub-section (10) of Section 73.

5.4 Sub-section 73(3) stipulates next step that after issuance of notice u/s. 73(1) the proper officer may serve a statement containing details of tax not paid /short paid/erroneous refund or input tax credit wrongly availed or utilized for such period other than those covered under sub-section (1).

5.5 Section 73(5), (6), (7) and (9) relate to opportunity to be given by show cause notice to the noticee to deposit tax interest and benefit as specified in the notice, within 30 days and the eventuality of compliance, part compliance or non-compliance.

6. From the language employed in Section 73, it is obvious that Section 73(1) affords opportunity to noticee to show cause which means to respond as to why he should not pay the amount specified in the notice with interest and penalty, if any.

6.1 Though no time period is stipulated in Section 73 for the noticee to respond but it is obvious that the statute contemplates affording of reasonable opportunity to reply to show cause notice.

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Raymond Limited

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Madhya Pradesh High Court 

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