Petition dismissed; contractor held taxable supplier, discrepancies triggered adjudication under Section 73; show-cause notices valid

HC dismissed the petition, holding that the contractor is a taxable supplier and that discrepancies between GSTR-3B returns and WAMIS data properly triggered adjudication under Section 73. The notices dated 06.08.2022 were valid; the petitioner must answer the show-cause notices and may contest factual and legal issues, seek time extensions, and rebut allegations before the Assessing Officer. Proceedings before Executive Engineers were held irrelevant to tax adjudication. Entertaining a writ at the notice stage was premature; extraordinary relief under Article 226 was unwarranted, and the petition was dismissed.

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Issues Involved:
1. Validity of Demand-cum-Show Cause Notices under GST Act.
2. Reimbursement of differential tax due to change from VAT to GST.
3. Competence of the CT&GST Officer to initiate proceedings under Section 73 of the GST Act.
4. Non-joinder and mis-joinder of necessary parties.
5. Jurisdiction of the High Court under Article 226/227 of the Constitution of India.

Issue-wise
Detailed Analysis:

1. Validity of Demand-cum-Show Cause Notices under GST Act:
The petitioner sought to quash the Demand-cum-Show Cause Notices dated 06.08.2022 issued by the CT&GST Officer, Angul Circle, for the tax periods 2017-18 and 2018-19. The notices were issued under Section 73 of the GST Act due to discrepancies between the figures furnished in Form GSTR-3B and the data available in the WORKS AND ACCOUNTS MANAGEMENT INFORMATION SYSTEM (WAMIS). The petitioner argued that these notices were ultra vires, illegal, and unconstitutional. However, the court held that the proper officer is competent to initiate proceedings under Section 73 for determining tax liability and that the notices are not invalid or vague.

2. Reimbursement of Differential Tax Due to Change from VAT to GST:
The petitioner contended that the change in tax regime from VAT to GST, effective from 01.07.2017, necessitated reimbursement of the differential tax by the contractee. The petitioner referred to guidelines issued by the Government of Odisha, which provided a modality for reimbursement. The court noted that the Revised Guidelines dated 10.12.2018 addressed this issue and required the contractor to bear all taxes, including GST. The court found that the petitioner's reliance on earlier guidelines dated 07.12.2017 was an attempt to misguide the court.

3. Competence of the CT&GST Officer to Initiate Proceedings under Section 73 of the GST Act:
The court examined whether the CT&GST Officer of Angul Circle was competent to initiate proceedings under Section 73 of the GST Act. It was held that the officer, functioning as the "proper officer," was indeed competent to initiate such proceedings based on discrepancies between the tax liability disclosed in GSTR-3B and the WAMIS data. The court emphasized that the determination of tax liability is within the domain of the proper officer, as defined under Section 2(91) of the GST Act.

4. Non-joinder and Mis-joinder of Necessary Parties:
The court found that the writ petition was incompetent due to non-joinder and mis-joinder of necessary parties. The petitioner had not impleaded the Executive Engineer of Rengali Right Canal Division No.II, Dhenkanal, against whom no relief could be asserted. Therefore, the court held that the petition lacked merit on this ground.

5. Jurisdiction of the High Court under Article 226/227 of the Constitution of India:
The court reiterated the principle of self-imposed restriction on entertaining writ petitions at the stage of show cause notices. It emphasized that the petitioner should exhaust alternative remedies available under the statutory framework before invoking the extraordinary jurisdiction of the High Court. The court cited several precedents, including the Supreme Court's decisions in Star Paper Mills Ltd. v. State of U.P. and Commissioner of Income Tax v. Chhabil Dass Agarwal, to support this principle. The court concluded that meddling at the stage of show cause notices would be premature and contrary to settled principles.

Conclusion:
The writ petition was dismissed as the court found no merit in the contentions raised by the petitioner. The court held that the proper officer was competent to initiate proceedings under Section 73 of the GST Act and that the petitioner should exhaust alternative remedies before seeking relief under Article 226 of the Constitution of India.

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