Writ petition against Show Cause Notice is premature before reply

The Hon’ble Madras High Court in M/s. Renaatus Projects Private Limited, Rep by Managing Director, Mr. Manoj Poosappan Versus The Joint Director, Directorate General of GST Intelligence, Chennai, The Joint Commissioner, CGST & Central Excise, Chennai - 2025 (8) TMI 1639 - MADRAS HIGH COURT held that a writ petition challenging a Show Cause Notice (SCN) demanding GST on offshore construction services by a Foreign Branch Office (FBO) for a project in Mauritius is premature at the SCN stage, and directed the petitioner to file a detailed reply to the SCN before seeking judicial review.

Facts:

Renaatus Projects Private Limited (“the Petitioner”) is a Chennai-based company registered under GST, which undertook the construction of the new Supreme Court building at Port Louis, Mauritius, by opening a Foreign Branch Office (‘FBO’) and executing all contracts, invoicing, and payments in Mauritius.

The Joint Director, Directorate General of GST Intelligence, Chennai, and the Joint Commissioner, CGST & Central Excise, Chennai North Commissionerate ('the Respondents') issued a SCN alleging GST was payable in India for the construction services rendered abroad.

The Petitioner contended that both the service provider i.e., the FBO and recipient i.e., M/s. NBCC Mauritius branch, was outside India, all corporate, financial, and regulatory activities occurred in Mauritius, and as per Section 2(71) and Section 2(70) of the CGST Act, the location of both provider and recipient was Mauritius, making the supply entirely offshore and non-taxable in India.

The Respondent contended that the contract was awarded by M/s. NBCC in Delhi to the Petitioner in Chennai, that the project was managed via a branch established only for project execution, and that under Section 12(3)IGST Act (place of supply rules for immovable property), the transaction was taxable in India as an inter-state supply. The SCN, they argued, was only a proposal for information, and the Petitioner must respond in detail before challenge.

Aggrieved by the SCN, the Petitioner sought writ relief to quash it as without jurisdiction; the High Court was approached under Article 226 before reply/adjudication at administrative level.

Issue:

Whether a writ petition may be sustained against an unadjudicated GST Show Cause Notice for offshore construction services on the grounds of lack of jurisdiction?

Held:

The Hon’ble Madras High Court in M/s. Renaatus Projects Private Limited, Rep by Managing Director, Mr. Manoj Poosappan Versus The Joint Director, Directorate General of GST Intelligence, Chennai, The Joint Commissioner, CGST & Central Excise, Chennai - 2025 (8) TMI 1639 - MADRAS HIGH COURTheld as under:

• Observed that, the SCN was detailed, running over 20 pages with multiple factual issues requiring reply and supporting documents from the Petitioner.
• Noted that, unless a reply is filed to the SCN, the authority cannot assess or decide the exact nature of the transaction or whether GST can be imposed.
• Distinguished the Telangana High court judgment in the case of Sri Avantika Contractors (I) Limited. Versus Appellate Authority for Advance Ruling (GST) and others. - 2024 (8) TMI 943 - TELANGANA HIGH COURT, holding that the latter dealt with a final order after reply and adjudication, whereas the present case was still at proposal/SCN stage
• Held that, reply should first be filed to SCN, so the Department can take a reasoned view; only after an adverse order, if the Petitioner remains aggrieved, should the High Court’s writ jurisdiction be invoked.
• Dismissed the writ petition as premature, granting liberty to file a detailed reply/documents to the SCN within 30 days, affirming petitioner’s right to challenge final order in the manner known to law.

Our Comments:

The decision reinforces the principle that High Courts normally do not entertain pre-adjudication writs against Show Cause Notices, except in exceptional cases. The Court correctly distinguished the Telangana High Court’s case of Sri Avantika Contractors (I) Limited. Versus Appellate Authority for Advance Ruling (GST) and others. - 2024 (8) TMI 943 - TELANGANA HIGH COURT], which dealt with post-adjudication review, underscoring the requirement of procedural exhaustiveness within the administrative framework before seeking extraordinary remedies. This approach aligns with consistent Supreme Court in the case of Union of India & Others Versus Coastal Container Transporters Association & Others - 2019 (2) TMI 1497 - Supreme Courtand the principle of exhaustion if other alternate remedies before approaching the High courts, unless exceptional grounds exist.

Relevant Provisions:

Section 2(70), CGST Act, 2017

“Location of the recipient of services” means—

(a) where a supply is received at a place of business for which the registration has been obtained, the location of such place of business;

(b) where a supply is received at a place other than the place of business for which registration has been obtained (a fixed establishment elsewhere), the location of such fixed establishment;

(c) where a supply is received at more than one establishment, whether the place of business or fixed establishment, the location of the establishment most directly concerned with the receipt of the supply; and…”

Section 2(71), CGST Act, 2017

“Location of the supplier of services means,-

(a) where a supply is made from a place of business for which the registration has been obtained, the location of such place of business;

(b) where a supply is made from a place other than the place of business for which registration has been obtained (a fixed establishment elsewhere), the location of such fixed establishment;

(c) where a supply is made from more than one establishment, whether the place of business or fixed establishment, the location of the establishment most directly concerned with the provisions of the supply; and…”

Section 12(3), IGST Act, 2017

“The place of supply of services,-

(a) directly in relation to an immovable property, including services provided by architects, interior decorators, surveyors, engineers and other related experts or estate agents, any service provided by way of grant of rights to use immovable property or for carrying out or co-ordination of construction work; or

(b) by way of lodging accommodation by a hotel, inn, guest house, home stay, club or campsite, by whatever name called, and including a house boat or any other vessel; or

(c) by way of accommodation in any immovable property for organising any marriage or reception or matters related thereto, official, social, cultural, religious or business function including services provided in relation to such function at such property; or…”

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