Two-Wheeler Manufacturer Wins GST Classification Challenge, Gains Opportunity to Resolve Tax Dispute Through Amnesty Scheme

HC ruled in favor of petitioner challenging a GST show cause notice for two-wheeler seat classification. The court set aside the single comprehensive notice and directed separate show cause notices for each assessment year, enabling the petitioner to participate in the upcoming AMNESTY scheme. No costs were imposed, with specific instructions for future compliance within two weeks.

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Issues:
Challenge to show cause notice under section 74 of the CGST Act for misclassification of goods and alleged short payment of GST. Availability of AMNESTY scheme and request for separate show cause notices for each assessment year.

Analysis:
The petitioner challenged a show cause notice dated 25.07.2024, alleging misclassification of two-wheeler seats under Customs Tariff Heading (CTH) 9401 instead of CTH 8714, resulting in short payment of GST. The petitioner argued that confusion existed in the industry regarding the correct classification, leading to the deposit of differential GST amount under protest. The petitioner requested separate show cause notices for each assessment year to avail the AMNESTY scheme, as issuing a single notice prevented them from benefiting from the scheme scheduled to commence from 1st November 2024.

The petitioner contended that the impugned notice demanding tax for six assessment years hindered their ability to benefit from the AMNESTY scheme. They cited a previous judgment where show cause notices for separate years were set aside, emphasizing the need for separate notices to avail the scheme. The petitioner expressed willingness to forego the refund of the deposited amount if separate notices were issued, and committed to not raising issues of limitation, opting instead to resolve the matter through the AMNESTY scheme.

The respondent's counsel acknowledged the petitioner's submissions and requested appropriate orders. The court considered the arguments presented by both parties and noted that the petitioner disputed the show cause notice issued under section 74 of the CGST Act, claiming no willful misstatement and asserting the correct classification of the goods under CTH 9401. The court accepted the petitioner's request for separate show cause notices for each assessment year to enable participation in the upcoming AMNESTY scheme.

In light of the discussions and submissions, the court set aside the impugned show cause notice and issued directions for separate notices to be issued for each of the six assessment years within two weeks. The petitioner was instructed not to raise issues of limitation and to forgo any refund of the deposited amount. The court disposed of the writ petition with no costs and scheduled compliance for a future date.

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