2023 (12) TMI 943 - HC - GST

CAG lacks jurisdiction to issue demand notice under Section 73(1) without complying with Section 61 conditions

M/s. Pepsico India Holdings Pvt. Ltd. Versus The Union Of India And 3 Ors, The Additional Commissioner Office Of Principal Commissioner Gst And Excise Commissionerate, Superintendent Range 1f Goods And Services Tax Guwahati Division-I, Principal Commissioner Cgst And Excise Commissionerate

The HC held that the CAG lacked jurisdiction to issue a demand-cum-show cause notice under Section 73(1) of CGST Act, 2017. The court found that mandatory ... Recovery of IGST - Validity of demand / show cause notice - Jurisdiction of CAG to issue notices / SCN - Conditions and procedure for issuance of SCN u/s 73(1) - HELD THAT:- Prior to issuance of a show cause notice under Section 73[1] of the CGST Act, 2017, it is mere discrepancy. At that stage, the alleged discrepancy would only be a discrepancy simplicitor but at the stage of issuance of Demand-cum-Show Cause Notice under Section 73[1] of the CGST Act, 2017, there is formation of a prima facie opinion on the part of the Proper Officer that there is an act, which is in violation of the statutory obligation cast on the noticee. Admittedly in the case in hand, the Form GST ASMT-10 was not issued to the petitioner. A contention has also been raised that the CAG is not the Proper Officer to issue any kind of letters regarding the discrepancy. This Court finds force in the contentions advanced by the petitioner that an act of issuance of the impugned Demand-cum-Show Cause Notice dated 05.09.2023 under Section 73[1] of the CGST Act, 2017 by the Proper Officer was without compliance of the mandatory conditions precedent, prescribed under the CGST Act, 2017 and the CGST Rules, 2017, more particularly, the provisions of Section 61 of the CGST Act, 2017 r/w Rule 99 of the CGST Rules, 2017, to derive jurisdiction to issue such a Demand-cum- Show Cause Notice under Section 73[1] of the CGST Act, 2017, impugned herein. Thus, it is ordered that the operation of the impugned Demand-cum-Show Cause Notice shall remain stayed, till the returnable date. Issues:The judgment involves a writ petition challenging a Demand-cum-Show Cause Notice issued under Section 73[1] of the Central Goods and Services Tax Act, 2017 regarding the alleged wrongful availing of Input Tax Credit (ITC) by the petitioner company for the Financial Year 2017-2018.Details of the Judgment:*Issue 1: Proper Officer's Authority to Issue Notice*The petitioner contested that the Demand-cum-Show Cause Notice lacked jurisdictional facts required for its issuance under Section 73[1] of the CGST Act, 2017. They argued that the statutory prescriptions under Section 61 and Section 73 of the Act were not adhered to, specifically the requirement of issuing notice in Form GST ASMT-10 prior to the impugned notice. The petitioner emphasized that without adherence to these conditions precedent, the Proper Officer could not have assumed jurisdiction to issue the notice.*Issue 2: Compliance with Statutory Provisions*The petitioner highlighted that the alleged discrepancy mentioned in the notice was related to the non-submission of information in Table 14 of FORM GSTR-9C. They argued that since the submission of information in Table 14 had been made optional for certain financial years, there was no error or discrepancy from the petitioner's non-filing of this information. The petitioner contended that the mandatory conditions required for invoking Section 73[1] of the CGST Act were absent in this case.*Issue 3: Natural Justice Principles*The respondent argued that the non-issuance of Form GST ASMT-10 did not violate the principles of natural justice. They relied on previous court decisions to support their stance that the issuance of the Demand-cum-Show Cause Notice was in conformity with natural justice principles. The respondent emphasized that the notice was issued to the petitioner as the assessee, following the principles of natural justice.*Separate Judgment Highlighted:*The Court found merit in the petitioner's contentions that the Demand-cum-Show Cause Notice was issued without compliance with mandatory conditions precedent, as prescribed under the CGST Act, 2017 and the CGST Rules, 2017. Consequently, the Court ordered that the operation of the impugned notice shall remain stayed until the returnable date, allowing the respondent GST authorities to file their response in the meantime.