Parallel Proceedings by Various Authorities Under GST Law

In ‘Group M Media India Private Limited v. Union of India and others’ – 2024 (10) TMI 1611 – P&H High Court, a show cause notice was issued to the petitioner under Section 73 of the Central Goods and Services Tax Act, 2017 (‘Act’ for short) by the Adjudicating Authority. The petitioner filed a reply to the show cause notice. Later the proceedings on the said cause notice were dropped by the Authority vide its letter dated 28.02.2023. In the meanwhile, Director General of GST Intelligence issued notice to the petitioner. The petitioner also filed reply to the said notice. Haryana State GST Intelligence also took proceedings against the petitioner.

The Haryana State Tax Authorities issued a notice under Section 74 of the Act to the petitioner. The petitioner assailed the notice issued under Section 74 of the Act read with Section 20 of the Integrated Goods and Services Tax Act, 2017 (‘IGST Act’ for short). The petitioner submitted the following before the High Court-

• the show cause notice issued under Section 74 of the Act does not reflect and point out as to what manner of concealment of tax has been done by the petitioner.
• as per Section 74 of the Act, the show cause notice should point out as to what are the incriminating allegations against the petitioner and as to how the petitioner has attempted a fraud to evade tax, any wilful mis-statement to evade tax, or suppression of facts to evade tax.

The petitioner further relied on the judgment of Allahabad High Court in ‘HCL Infotech Limited v. Commissioner of Commercial Taxes and another’ – 2024 (9) TMI 1644 of Allahabad High Court in which the High Court held that the impugned Show Cause Notice does not make even a whisper of the fact that petitioner has wrongly availed or utilized Input Tax Credit due to any fraud, or wilful mis-statement or suppression of facts to evade tax therefore, the proceedings initiated against the petitioner under Section 74 of the Act are without jurisdiction for the lack of basic ingredients required under the said clause. So far as the argument advanced by the learned counsel appearing for the respondents that the writ petition against the Show Cause Notice is not maintainable, is concerned, the High Court found that it is consistent view of the Hon’ble Supreme Court that if the Show Cause Notice is without jurisdiction, then the same can be challenged by filing writ petition before the High Court under Article 226 of the Constitution of India. The High Court also held that it is not found that the basic ingredients required for initiating proceedings under Section 74 of the CGST Act are present in the impugned Show Cause Notice dated 30.12.2023. Therefore, the entire exercise including the Show Cause Notice is without jurisdiction and thus this writ petition under Article 226 of the Constitution of India is maintainable.

The High Court considered the submissions of the petitioner carefully. The High Court observed that the contentions of the petitioner were totally misconceived. The issuing of notice under Section 73 of the Act and later dropping of the same would not prevent that Authorities to proceed Action under Section 74 of the Act.

The High Court next considered the submissions of the petitioner about the parallel proceedings initiated by more than one authority – DGGI, Haryana State Intelligence wing and the Assistant Commissioner under the Act. The High Court observed the following-

• The Assistant Commissioner, vide his letter dated 10.03.2023 issued to the petitioner, requested the petitioner to deposit the tax.
• The DGGI issued notice to the petitioner seeking some clarifications.
• None of the above has initiated proceedings under Section 74 of the Act.

The High Court, next considered the notice issued to the petitioner under Section 74 of the Act. The allegations in the said show cause notice are-

• The petitioner has availed credit input tax credit in excess to the tune of-

• Rs. 8.84 crore of IGST;
• Rs. 23.44 crore of CGST; and
• Rs. 23.44 crore of SGST.

• The petitioner has not declared his tax liability in GSTR -2A which implied that the petitioner has not paid his GST liability to the Government.
• The petitioner, thus, has not fulfilled the provisions of Section 16(2)(c) of the Act.

Therefore, the show cause notice, under Section 74 was issued to the petitioner as he has availed the input tax credit wrongfully. The petitioner, instead of filing reply to the said show cause notice, directly approached the High Court by filing the present writ petition. Since the proceedings under Section 74 of the Act are comprehensively and completely laid down under the Act, the High Court was reluctant in interfering in the disposal of the proceedings under Section 74 of the Act.

The High Court also observed that the case and facts of HCL Infotech Ltd. (supra) are found to be different from the present case and it cannot be said that the notice does not reflect the allegations. The High Court held that the writ petition cannot be entertained for the said purposes, more so when prima facie the show cause notice specifically reflects the allegations which the tax authorities feel to reflect of a fraud having been committed by the petitioner.