Karnataka HC refuses to hear challenge against show-cause notice, directs petitioner to respond before authorities

Karnataka HC declined to entertain writ petition challenging demand-cum-show-cause notice. Court held that show-cause notices generally cannot be challenged as they do not affect parties' rights until translated into adverse orders. Exception exists only when issuing authority lacks jurisdiction. Following SC precedent in Special Director v. Mohd. Ghulam Ghouse, petitioner was directed to respond to the notice before authorities, who must consider all contentions and pass orders according to law. Appeal disposed of.

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Issues:
Challenge to demand-cum-show-cause notice under GST Act.

Analysis:
The case involved a challenge to a demand-cum-show-cause notice issued under the Goods and Services Tax Act, 2017. The petitioner, a company engaged in the manufacture and sale of sugar products, contested a notice demanding GST on Extra Neutral Alcohol (ENA) supplied for human consumption. The petitioner argued that ENA supplied for human consumption was exempt from GST, citing relevant notifications and recommendations. The respondent, Joint Commissioner of Central GST and Central Excise, defended the notice, stating that ENA supplied for manufacturing alcohol for human consumption attracted GST. The High Court considered whether the challenge to the notice was premature and whether the authorities had the jurisdiction to issue the notice.

The Court highlighted that challenging a show-cause notice before it translates into an adverse order is generally not entertained, as it does not affect the parties' rights immediately. The Court referred to the Supreme Court's stance on challenging show-cause notices, emphasizing that unless the notice lacks jurisdiction, it should be responded to before seeking judicial intervention. In this case, the Court refrained from delving into the jurisdictional questions raised by the petitioner, directing them to address their concerns before the authorities first.

The Court noted the petitioner's arguments regarding the absence of a notification prescribing GST rates for ENA supplied for human consumption and the recommendations of the GST Council. However, it emphasized that the authority should examine these factual aspects based on the material presented. The Court declined to entertain the appeal, advising the petitioner to respond to the notice and present their contentions before the authorities for appropriate consideration in accordance with the law.

In conclusion, the Court disposed of the writ appeal, granting the petitioner time to reply to the notice and directing the authorities to hear the petitioner's objections and decide on the matter lawfully. The Court instructed the authorities not to take any precipitative action based on the notice until a decision was reached. If the petitioner failed to respond within the stipulated time, the authorities were permitted to proceed as per the law.

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