Judicial Scrutiny of GST Show Cause Notice Balances Procedural Fairness with Fiscal Accountability Under Section 73

HC addressed a challenge to a show cause notice under Section 73 of GST Act. While finding a prima facie case, the court did not stay the notice due to fiscal policy considerations. The court permitted proceedings to continue but prohibited a final order without court permission, directing affidavit exchanges and extending response time to the notice.

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Issues involved: Challenge to show cause notice under Section 73 of the CGST/WBGST Act 2017, extension of time limit for issuance of order, validity of notification extending time limit, jurisdictional issue, stay of show cause notice.

Challenge to show cause notice under Section 73:
The petitioner filed a writ application challenging the show cause notice dated 15th January 2024 issued under Section 73 of the GST Act. The petitioner argued that there is an outer time limit provided in the statute itself for issuance of such notice. The respondents extended the time limit through notifications dated 31st March 2023 and 28th December 2023, which the petitioner contended was a colorable exercise of power. The petitioner claimed that a valuable right had accrued and sought a stay on the show cause notice to prevent the completion of the process and the passing of a final order.

Extension of time limit for issuance of order:
The respondents extended the time limit specified in Section 73 of the GST Act for the issuance of orders relating to tax recovery and input tax credit. The petitioner argued that the notifications extending the time limit were not valid as they were issued in a colorable exercise of power. The petitioner pointed out that a power to extend time limits in special circumstances due to force majeure was conferred on the Government by Section 168A of the GST Act.

Jurisdictional issue and stay of show cause notice:
The Court considered the jurisdictional issue raised by the petitioner and noted that a prima facie case had been made out. However, due to the involvement of the fiscal policy of the State and a previous interim order by a co-ordinate Bench, the Court decided not to stay the show cause notice. The respondents were allowed to continue with the proceeding, but no final order could be passed without the Court's permission. The Court directed the filing of affidavits and extended the time for response to the show cause notice.

In conclusion, the Court addressed the challenge to the show cause notice under Section 73 of the GST Act, the extension of time limits for issuance of orders, the jurisdictional issue, and the decision regarding the stay of the show cause notice. The Court allowed the proceeding to continue but restricted the passing of a final order without its leave, emphasizing the need for exchange of affidavits and extending the time for response to the show cause notice.

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