2024 (1) TMI 1345 - HC - GST

Tax Dispute Resolution: Finance Department Ordered to Clarify Show Cause Notices with Interim Relief Against Coercive Actions

HC ruled on tax dispute, directing Finance and Taxation Department to provide instructions regarding show cause notices for the same tax period. Court ... Maintainability of multiple show cause notices for the same tax period - requirement of prior audit under Section 65 and issuance of Audit Observation Note under Rule 101(4) - effect of administrative instruction on issuance of show cause notices (Instruction No. 13/2023-GST) - interim relief by restraint on coercive actionInterim relief by restraint on coercive action - Whether coercive action in terms of the impugned show cause notice is to be restrained until the next date of listing - HELD THAT: - The High Court, having heard counsel and on the projections made by the parties, directed that no coercive action shall be taken in terms of the impugned Show Cause Notice until the next date on which the matter is listed. The order was passed as an interim protective measure pending further instructions and hearing, without adjudicating the merits of the rival contentions about the validity of the notices. [Paras 5]No coercive action in terms of the impugned Show Cause Notice shall be taken until the next date of listing.Maintainability of multiple show cause notices for the same tax period - requirement of prior audit under Section 65 and issuance of Audit Observation Note under Rule 101(4) - effect of administrative instruction on issuance of show cause notices (Instruction No. 13/2023-GST) - Validity and maintainability of two show cause notices issued for the same tax period and related compliance with prior audit/administrative instruction were not adjudicated and were left for further consideration - HELD THAT: - The petitioner challenged two Show Cause Notices issued for the tax period April, 2018 6 March, 2019, contending that one notice was not preceded by the audit process and that issuance was impermissible in view of Instruction No. 13/2023-GST. The respondents sought time to obtain instructions on the issuance of the impugned notice. The Court did not decide the legal questions on maintainability, the necessity of a prior audit under Section 65 and Rule 101(4), or the applicability of the administrative instruction; instead the matter was adjourned for consideration after the respondents obtain instructions. [Paras 2, 3, 4]The controversy over the issuance and maintainability of the two show cause notices and compliance with the alleged audit requirement and Instruction No. 13/2023-GST is to be considered afresh after respondents obtain instructions; the court did not adjudicate these issues on merits.Final Conclusion: The High Court granted an interim restraint on coercive action under the impugned show cause notice until the next listing, while leaving the substantive questions regarding the validity of two show cause notices for the same tax period, the necessity of a prior audit, and the impact of Instruction No. 13/2023-GST to be considered subsequently after respondents obtain instructions. The petitioner challenged two show cause notices issued for the same tax period under CGST/AGST Act, 2017. The High Court directed the Finance and Taxation Department to provide instructions and listed the case for further hearing on 02.02.2024. No coercive action to be taken until then.