Writ interference at the notice stage was declined in a Section 74 CGST dispute, with fair adjudication safeguards directed.
A writ court will ordinarily not interfere under Article 226 against a notice issued under Section 74 of the CGST Act where the dispute turns on fact-intensive questions such as the genuineness of suppliers, the movement and receipt of goods, and the evidentiary value of invoices, e-way bills and bank payments; the challenge at the notice stage was therefore not accepted. The adjudication was left to proceed, with direction that all relied upon documents be furnished and that the petitioner be given a reasonable opportunity of hearing, and the authority must act strictly in accordance with law.
Issues: (i) Whether interference was warranted under Article 226 of the Constitution of India against a notice issued under Section 74 of the Central Goods and Services Tax Act, 2017 at the preliminary stage; (ii) whether the petitioner was entitled to disclosure of relied upon documents and continuation of adjudication strictly in accordance with law.
Issue (i): Whether interference was warranted under Article 226 of the Constitution of India against a notice issued under Section 74 of the Central Goods and Services Tax Act, 2017 at the preliminary stage.
Analysis: The challenge was directed against a show-cause notice under Section 74. The existence and bona fides of the petitioner's suppliers, the genuineness of the supplies, transport and receipt of goods, and the effect of documentary material such as tax invoices, e-way bills and bank payments were found to involve fact-intensive matters requiring evidence. In view of these disputed questions of fact and the material gathered in the revenue's investigation, it could not be said that no basis existed to initiate proceedings. The Court declined to exercise extraordinary jurisdiction at that stage.
Conclusion: Interference under Article 226 was not warranted and the challenge to the notice was not accepted.
Issue (ii): Whether the petitioner was entitled to disclosure of relied upon documents and continuation of adjudication strictly in accordance with law.
Analysis: The proceedings were left to be contested before the adjudicating authority, and the Court directed that all relied upon documents be furnished and that the matter proceed only after granting a reasonable opportunity of hearing. The adjudicating authority was also required to act strictly in accordance with law.
Conclusion: The petitioner was entitled to disclosure of relied upon documents and a fair opportunity in adjudication.
Final Conclusion: The writ petition was not entertained on merits at the notice stage, and the controversy was left to be decided in adjudication with procedural safeguards.
Ratio Decidendi: A writ court will ordinarily not interfere at the notice stage under Article 226 where proceedings under Section 74 of the Central Goods and Services Tax Act, 2017 rest on disputed questions of fact requiring evidence, and the affected party must ordinarily pursue the statutory adjudicatory process with disclosure of relied upon material and a fair hearing.
TaxTMI 
AI Drafter ✕
TaxTMI 
