Legal Challenge to GST Show Cause Notice Partially Upheld, Petitioners Granted Opportunity to Respond and Raise Procedural Arguments

HC partially allowed writ petitions challenging GST show cause notice. Court directed petitioners to file replies to SCN, permitting them to raise jurisdictional and procedural arguments during adjudication. No final view taken on merits. Petitioners granted opportunity to present legal pleas in subsequent proceedings related to tax investigation.

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Issues:
Challenging Show Cause Notice invoking Section 122(1A) of CGST Act - Jurisdictional challenge due to insolvency proceedings - Entertaining writ petitions at SCN stage.

Analysis:
The judgment deals with three writ petitions challenging a Show Cause Notice (SCN) issued by the Directorate General of Goods and Services Tax Intelligence under Section 122(1A) of the Central Goods and Services Tax Act, 2017 (CGST Act). The SCN was issued to the petitioners, who were associated with a company, for transactions prior to the provision coming into force. The petitioners had not replied to the SCN despite the lapse of time. The petitioners argued that the proceedings were without jurisdiction due to the company's insolvency proceedings under the Insolvency and Bankruptcy Code, 2016 (IBC). They relied on legal precedents to support their contention, emphasizing that they could not be held liable for dues prior to the Insolvency Resolution Plan. The court noted that adjudication proceedings had not yet taken place and directed the petitioners to file their replies to the SCN by a specified date, allowing them to raise all legal pleas during the adjudication process.

Regarding the issue of entertaining the writ petitions at the SCN stage, the petitioners relied on legal precedents to support their position. The court considered the submissions and decided to permit the petitioners to raise all their arguments during the reply to the SCN and in the subsequent adjudication proceedings. The court refrained from expressing any view on the contentions raised in the writ petitions at that stage. It issued directions for the petitioners to file their replies, ensuring that all pleas would be considered during the adjudication process. The court clarified that it had not expressed any opinion on the matter and stated that the petitioners could seek appropriate remedies if aggrieved by the adjudication order. The writ petitions were disposed of with the given directions, and an urgent certified copy of the order was to be issued in accordance with rules.

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