Publisher wins interim relief against GST show cause notice for NCERT book printing services

The Allahabad HC addressed a challenge to a show cause notice regarding GST levy on printing services. The court noted the SCN lacked specific allegations of wrongful tax availment through fraud or willful misstatement. Advance ruling authorities in Karnataka, West Bengal, and Chhattisgarh had held that printing books with content provided by NCERT constitutes supply of goods, with publishers acting as both copyright holders and printers. While respondents argued the writ petition was premature and alternative remedies existed, the court found petitioner established a prima facie case with balance of convenience favoring interim relief, despite general Supreme Court guidance against interference at SCN stage in fiscal matters.

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Issues:
Challenge to show cause notice under Article 226 of the Constitution of India regarding GST tax on printing services. Jurisdiction under Section 74 of the CGST Act. Maintainability of writ petition at the show cause notice stage.

Analysis:
The petitioner, aggrieved by a show cause notice related to GST tax on printing services, challenged the notice under Article 226 of the Constitution of India. The notice was issued based on a re-categorization by the Principal Chief Commissioner, directing action against book sellers. However, the notice lacked specific allegations of fraud or wilful misstatement regarding tax evasion by the petitioner. The court emphasized the distinction between Sections 73 and 74 of the CGST Act, highlighting that Section 74 requires the authority to be satisfied of fraud or wilful misstatement for jurisdiction. The court cited judgments to support the necessity of expressly mentioning fraud in the show cause notice under Section 74 for jurisdiction.

Moreover, advance ruling authorities in various states had held that printing educational books with content provided by educational boards constitutes supply of goods. The petitioner, paying royalty for content, was considered a copyright holder and printer. The court noted that these rulings were unchallenged by the government, indicating finality. The respondents argued the writ petition's non-maintainability at the show cause notice stage, suggesting the petitioner respond to the notice and pursue alternative remedies. However, the petitioner contended that the re-categorization leading to the notice was arbitrary and lacked fraud allegations against them.

The court acknowledged the general principle of avoiding interference at the show cause notice stage, especially in fiscal statutes with self-contained remedies. It cited Supreme Court judgments emphasizing the extraordinary nature of Article 226 powers and the importance of statutory compliance. Exceptions to the rule of alternative remedies were noted, including cases of patent illegality or lack of jurisdiction. In this case, the court found the show cause notice lacked fraud allegations against the petitioner and ignored final rulings by advance ruling authorities. Consequently, the court found a prima facie case in favor of the petitioner and stayed the show cause notice pending further proceedings.

The court directed the filing of counter affidavits and set a future hearing date, indicating a favorable balance of convenience for the petitioner in obtaining an injunction.

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