Court grants interim relief, restrains coercive action pending decision on special rate application

The Court issued a notice of motion returnable on 19.05.2021, considering the issues raised in the writ petition challenging the demand for interest and penalty under the Central Excise Act, 1944. Pending further orders, the Court directed the Commissioner of CGST to decide on the special rate application within four weeks and restrained any coercive measures against the petitioner based on the impugned notices until a decision is made on the special rate application. The matter was listed for further hearing on 19.05.2021, maintaining the status quo until then.

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Issues:
Challenge against demand for interest and penalty in a writ petition under Article 226 of the Constitution of India - Maintainability of the writ petition.

Analysis:

1. The petitioner, a manufacturing unit, filed a writ petition challenging the legality of a notice dated 01.01.2021 and 09.02.2021 seeking a refund of CGST, interest, and penalty under the Central Excise Act, 1944. The petitioner also requested to restrain the respondents from taking any action based on the notices until the application for a special rate is adjudicated.

2. The petitioner's counsel referred to two separate orders by the Court in similar cases, where the Commissioner of CGST was directed to consider applications for special rates before taking coercive action. The petitioners in those cases were allowed to approach the Court again for interest and penalty issues.

3. The petitioner's counsel argued that in the present case, the challenge is against the demand for interest and penalty, seeking similar relief as in the previous cases to avoid coercive actions until the special rate application is decided.

4. The Standing counsel for the respondents contended that the impugned notices were show-cause notices, raising the issue of the maintainability of the writ petition, which was left open for further consideration.

5. The Court issued a notice of motion returnable on 19.05.2021, considering the issues raised in the writ petition. An extra copy of the writ petition was requested to be provided to the respondents within two days.

6. Pending further orders, the Court decided to follow the previous orders and directed the Commissioner of CGST to decide on the special rate application within four weeks. No coercive measures were to be taken against the petitioner based on the impugned notices until a decision is made on the special rate application.

7. The matter was listed for further hearing on 19.05.2021, maintaining the status quo until then.

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