2024 (12) TMI 933 - HC - GST

Petition challenging show cause notice dismissed as debatable tax exemption issues require factual examination under Rule 142(1A)

Pidilite Industries Limited Versus The Union of India & Ors.

The Bombay HC dismissed a petition challenging a show cause notice on grounds of alleged breach of Rule 142(1A) of CGST Rules 2017 for failure to issue a ... Jurisdiction to entertain petition against show cause notice - Exhaustion of alternate remedies - Challenge to SCN on the ground of alleged breach of Rule 142 (1A) of the Central Goods and Services Tax Rules 2017 (CGST Rules) in as much as no preshow cause notice was issued to the petitioner - HELD THAT:- In ‘Oberoi Constructions Ltd. V/s. Union of India’ [2024 (11) TMI 588 - BOMBAY HIGH COURT], the precedents on the exhaustion of alternate remedies surveyed - it was held in the said case that 'In the present petitions, the issue of whether the petitioners’ cases are covered by the exemption notification or the nil tax rate notification is debatable. The petitioners themselves accept that some of the services in the SCN may attract exemption and others may not. Ordinarily, SCNs cannot be split or quashed, especially where there are arguable issues on either side. In any case, the resolution would require examination into several factual aspects. In such situations, the contention of the SCN being wholly without jurisdiction cannot be accepted.' Following the reasoning therein, this petition is declined and the petitioner is relegated to respond to the impugned show cause notice. However, it is clarified that all contentions of all parties, are left open to be considered by the respondent that has issued show cause notice. Petition disposed off. Issues:Challenge to show cause notice for alleged breach of Rule 142(1A) of CGST Rules - Requirement of pre-show cause notice - Jurisdiction to entertain petition against show cause notice - Exhaustion of alternate remedies.Analysis:The petitioner challenged a show cause notice dated 9 December 2021, alleging a breach of Rule 142(1A) of the CGST Rules due to the absence of a pre-show cause notice. The petitioner contended that despite the amendment substituting 'may' for 'shall' in Rule 142(1A), a pre-show cause notice was mandatory for the relevant period. Citing precedents, the petitioner argued that issuing a pre-show cause notice was necessary, as held in similar cases by other High Courts. The respondent, on the other hand, argued that there was no requirement for a pre-show cause notice post-amendment and that the decision not to issue one was based on the exchanged correspondence and discretion of the respondents.The court considered the arguments and found no grounds to interfere with the show cause notice. It noted that the contentions raised by the petitioner could be addressed in response to the notice, and the authority issuing the notice could consider these arguments along with the cited decisions. The court also acknowledged the reference to a Rajasthan High Court decision but clarified that the issue raised in that case was different from the present matter.The court refrained from deciding on the necessity of a pre-show cause notice, leaving the issue open for the authority issuing the notice to consider. It referenced a Supreme Court decision emphasizing that objections should be raised to the issuing authority before challenging any adverse order. The court recognized the arguable nature of the contentions raised by the petitioner, considering the legislative amendment and the correspondence on record. Consequently, the court declined to interfere at the stage of issuing the show cause notice and directed the petitioner to respond to the notice within four weeks.In line with previous judgments emphasizing the exhaustion of alternate remedies, the court dismissed the petition and instructed the petitioner to address the show cause notice appropriately. All contentions, including those raised by the petitioner, were left open for consideration by the respondent authority. The court concluded by disposing of the petition with no costs and instructed all parties to act according to the order.