Show-Cause Notice Challenge Dismissed; Court Upholds Participation in GST Rate Dispute Process.

The HC dismissed the writ petition challenging the show-cause notice in Form GST DRC-01 regarding the GST rate increase from 18% to 28%. The court held that the issuance of a show-cause notice does not justify invoking writ jurisdiction. The petitioner can respond to the notice, participate in the hearing, and appeal any adverse decision under the CGST Act. The court directed respondents to handle representations per legal requirements.

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Issues:
Challenge to show-cause notice in Form GST DRC-01 dated 03.08.2024 regarding GST rate increase from 18% to 28% without referring the matter to the Board or obtaining advance ruling.

Analysis:
The petitioner challenged a show-cause notice seeking to increase the GST rate from 18% to 28%, arguing that similarly situated manufacturers were not issued such notices. It was contended that this increase would lead to the closure of the petitioner's establishment, as competitors would benefit. The petitioner claimed that the notice was issued without referring the matter to the Board or obtaining an advance ruling, as mandated by circulars from the Central Board of Indirect Taxes and Customs.

The respondents opposed the writ petition, arguing that the show-cause notice could not be challenged through a writ petition. They contended that the petitioner could respond to the notice, and any subsequent order would be issued after providing an opportunity for a hearing under the Central Goods and Services Tax Act, 2017. The respondents cited a judgment related to the Excise and Customs Act, stating that any order under the CGST Act could be appealed to the Apex Court.

The court considered the submissions and noted the petitioner's concern about the potential financial impact of the increased GST rate. However, the court held that the mere issuance of a show-cause notice did not warrant invoking writ jurisdiction. The petitioner had the right to respond to the notice, be heard before any order was passed, and could appeal any decision made by the authorities. The court referenced a previous case to support the argument that a show-cause notice could not be the subject of a writ petition.

Ultimately, the court found no merit in the writ petition and dismissed it. The petitioner was granted the opportunity to respond to the representations, and the respondents were directed to act in accordance with the law while handling the representations.

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