High-Stakes Tax Dispute: Challenge to CGST Rule 31A and Section 15(5) Raises Critical Legal Questions on Procedural Fairness

HC issued Rule challenging Rule 31A of CGST Rules, Section 15(5) of CGST Act, and related notifications. Respondents agreed not to pass final orders on show cause notice without court's leave. Petitioners granted opportunity to file response. Matters set for final disposal, with Attorney General to be notified due to statutory challenge.

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Issues involved: Challenge to the vires of Rule 31A of the CGST Rules, 2017; Challenge to show cause notice dated 27.09.2023; Challenge to Section 15(5) of the CGST Act; Challenge to certain Notifications and Circulars issued under the CGST Act and Rules made thereunder.

Summary:

The petitions before the High Court of Bombay challenge the validity of Rule 31A of the CGST Rules, 2017, along with a show cause notice dated 27.09.2023, which is primarily based on the said rule. Additionally, there is a challenge to Section 15(5) of the CGST Act and certain Notifications and Circulars issued under the CGST Act and its related Rules. The petitioners are represented by a team of advocates led by Mr. Harish Salve, Senior Advocate, who also cited a similar challenge in a case before the High Court of Sikkim involving Delta Corp Limited and Another Vs Union of India and others. The Court has issued Rule in these petitions, and the respondents have waived service after Rule.

Since there is a challenge to Section 15(5) of the CGST Act, notice has been issued to the learned Attorney General. The Respondents, represented by Ms. Asha Desai, Senior Standing Counsel, have agreed not to pass any final orders on the show cause notice dated 27.09.2023 without the leave of the Court. The Petitioners are given the opportunity to file a response to the show cause notice by a specified date. The parties are directed to complete the pleadings within a specified timeline, with the matters set for final disposal on 05.02.2024, to be considered together.

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