2024 (10) TMI 965 - HC - GST

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 ... Challenge to SCN along with summary notice in Form GST DRC-01 - misclassification of two-wheeler seats under Customs Tariff Heading (CTH) 9401 instead of CTH 8714 - short payment of GST - invocation of extended period of limitation - HELD THAT:- This Court records the submission of the petitioner to the extent as follows that 'the deposit amount made by the petitioner as tax liability to the extent of Rs. 1,24,74,14,950/- shall not be claimed to be refunded. Further in the event, if the respondent is issuing separate show cause notices for six assessment years, the petitioner will not raise the issue of limitation.' However, the petitioner's intention is that only in the event of separate show cause notices being issued, the petitioner will pay the tax liability and avail the AMNESTY scheme, which is proposed to be launched by the respondent from November 2024 and would get the benefit of waiver of interest as well as penalty. This Court sets aside the bunching of show cause notices issued for separate years, in the present case, the show cause notices may be split up regarding assessment years and separate notices may be issued for each and every assessment years separately in order to avail AMNESTY Scheme, which is proposed to be launched during November 2024. The respondent is directed to issue separate show cause notices regarding six assessment years within a period of two weeks from the date of receipt of copy of this order, in which case, the petitioner shall not raise issue of limitation - The amount of Rs. 1,24,74,14,950/- crores already deposited by the petitioner, the petitioner shall not claim any refund of the said amount deposited with the respondent - the impugned show cause notice is set aside - Petition allowed. 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.