GST recovery petition dismissed as suppression of facts requires factual adjudication beyond extraordinary jurisdiction under Section 37

The Bombay HC dismissed a petition challenging a show cause notice issued for GST recovery. The petitioner was accused of suppressing facts and misstatements regarding non-furnishing of outward supply details under Section 37 of CGST Act, with authorities invoking extended limitation period from July 2017 to March 2022. The court held that determining suppression of facts and misstatement requires factual adjudication beyond its extraordinary jurisdiction under Article 226. The petition lacked challenge to the relevant circular and was deemed premature at show cause stage. The petitioner was granted time until 15 December 2024 to file reply, with authorities directed to provide personal hearing and pass reasoned order by 31 January 2025.

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Issues: Challenge to show cause notice under Article 226 of the Constitution of India, Entertainability of petition at the stage of show cause notice, Barred by limitation, Allegations of suppression of facts and misstatement, Extended period of limitation, Compliance with conditions of CGST Act, Shifting of onus, Jurisdiction of the High Court under Article 226, Alternative and efficacious remedy, Precedent of interim order from Delhi High Court.

Analysis:

The High Court of Bombay heard a petition challenging a show cause notice issued under Article 226 of the Constitution of India. The petitioner contested a notice demanding CGST, SGST, and IGST, along with interest and penalties. The respondents objected to the petition's entertainability at the show cause notice stage, arguing that the petitioner should first respond to the notice before approaching the court. The petitioner claimed the notice was time-barred and relied on a Delhi High Court decision for support.

The show cause notice focused on determining the value of supplies under the CGST Act, alleging suppression of facts and misstatements to evade GST payment. The notice invoked the extended period of limitation based on these allegations. The court noted that determining suppression of facts and compliance with statutory conditions required factual adjudication beyond its jurisdiction under Article 226. The petitioner's contention regarding the retrospective application of a circular was deemed ill-founded.

The court emphasized that the petitioner had an alternative and efficacious remedy available and cited precedents where writ petitions were not entertained merely on the grounds of challenging show cause notices. It highlighted that the High Court's jurisdiction under Article 226 is discretionary and subject to self-imposed limitations, emphasizing the importance of exhausting statutory remedies before approaching the court.

The court dismissed the petition challenging the show cause notice but granted the petitioner time to respond to the notice. It directed the adjudicating authority to provide a personal hearing and pass a reasoned order. The court clarified that it had not expressed any opinion on the case's merits and kept all contentions open for the adjudication process. The petition was dismissed with liberty in the specified terms, and no costs were awarded.

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