TaxTMI 
TaxTMI 
2020 (7) TMI 24
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....g the admission, hearing and final disposal of this petition, (i) Proceeding and Adjudication of impugned show cause notice at Annexure A to this petition to be stayed; and (ii) No coercive action to be taken against the petitioners; (d) Grant ad­interim reliefs in terms of prayers above; (e) Any other and further relief deemed just and proper be granted in the interest of justice; (f) To award Costs of and incidental to this application be paid by the Respondents; 2. The facts giving rise to this writ application may be summarised as under: 2.1 The writ applicant seeks to challenge the legality and validity of the show cause notice dated 30th November 2019 issued by the respondent No.1 under Section 122(1) of the Central Goods and Services Tax Act, 2017 (for short, 'the CGST Act') calling upon the writ applicant to show cause why an amount of Rs. 6,87,68,821/­ (Rupees Six Crore Eighty Seven Lac Sixty Eight Thousand Eight Hundred Twenty One only) should not be recovered for the alleged contravention of the provisions of the Act and the Rules. 3. Prima facie, it appears on plain reading of the impugned show cause ....
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....679; SUBMISSIONS ON BEHALF OF THE STATE: 11. Ms. Manisha Lavkumar Shah, the learned Government Pleader assisted by Mr. Dharmesh Devnani, the learned A.G.P. appearing for the State has vehemently opposed this writ application. According to Ms. Shah, the writ application seeking to question the legality and validity of a show cause notice is not maintainable because it cannot be said in the present case that the show cause notice issued by the respondent No.1 is without jurisdiction or a nullity. According to Ms. Shah, the show cause notice is yet to be adjudicated. It is submitted that the writ applicant must file his reply and make good his case for getting impugned show cause notice discharged. 12. Ms. Shah further contended that the challenge to the constitutional validity of Rule 142(1)(a) of the Rules is without any foundation. In this connection, Ms. Shah invited the attention of this Court to Section 164 of the Act, which confers powers upon the Government to make rules. Ms. Shah pointed out that Section 164 confers powers upon the Government on the recommendations of the counsel by a notification to make rules for carrying out the provisions of the Act, 2017. Ms. Shah ....
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....or both either fully or partially, in contravention of the provisions of this Act or the rules made thereunder; (viii) Fraudulently obtains refund of tax under this act; (ix) take or distribute input tax credit in contravention of section 20, or rules made there under (x) falsifies or substitute financial records or produce fake accounts or documents or furnishes any false information or return with an intention to evade payment of tax under this Act; (xi) is liable to be registered under this act but fails to obtains registration; (xii) furnishes false or incorrect information either at the time of applying for registration of subsequently; (xiii) Obstruct or prevent any officer in discharge of his duties under this act; (xiv) transport any taxable goods without the cover of documents as may be specified in this behalf; (xv) Suppress his turnover leading to evasion of tax under this act; (xvi) Fails to keep, maintain or retain books of account and other documents in accordance with the provision of this act or rules made thereunder; (xvii) fails to furnish information or documents called by a....
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....ly availed or utilised for such periods other than those covered under subsection (1), on the person chargeable with tax. (4) The service of statement under sub­section (3) shall be deemed to be service of notice under sub­section (1) of section 73, subject to the condition that the grounds relied upon in the said statement, except the ground of fraud, or any wilful­misstatement or suppression of facts to evade tax, for periods other than those covered under sub­section (1) are the same as are mentioned in the earlier notice. (5) The person chargeable with tax may, before service of notice under sub­-section (1), pay the amount of tax along with interest payable under section 50 and a penalty equivalent to fifteen per cent. Of such tax on the basis of his own ascertainment of such tax or the tax as ascertained by the proper officer and inform the proper officer in writing of such payment. (6) The proper officer, on receipt of such information, shall not serve any notice under sub­section (1), in respect of the tax so paid or any penalty payable under the provisions of this Act or the rules made thereunder. (7) Where the pr....
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.... writing, by the proper officer." 17. Section 164 of the Act, 2017 reads thus; "Power of the Government to make Rules 164. (1) The Government may, on the recommendations of the Council, by notification, make rules for carrying out the provisions of this Act. (2) Without prejudice to the generality of the provisions of sub­section (1), the Government may make rules for all or any of the matters which by this Act are required to be, or may be, prescribed or in respect of which provisions are to be or may be made by rules. (3) The power to make rules conferred by this section shall include the power to give retrospective effect to the rules or any of them from a date not earlier than the date on which the provisions of this Act come into force. (4) Any rules made under sub­section (1) or sub­section (2) may provide that a contravention thereof shall be liable to a penalty not exceeding ten thousand rupees." 18. Rule 142 of the CGST Rules, 2017 reads thus: "Notice and order for demand of amounts payable under the Act. Rule 142: (1) (a) The proper officer shall serve, along with the (a) notice issued under ....
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....bservations are thus: "23. The prayer for the issue of a writ of prohibition restraining the authorities under the Act from proceeding with the adjudication and the prosecution is essentially based on the constitutional challenge to the relevant provisions of the Act on the ground that they violate Articles 14 and 21 of the Constitution of India. Once we have held, as the High Court did, that the provisions are constitutional, the basis on which the writ of prohibition is sought for by the appellants disappears. It is settled by the decisions of this Court that a writ of prohibition will issue to prevent a Tribunal or Authority from proceeding further when the Authority proceeds to act without or in excess of jurisdiction; proceeds to act in violation of the rules of natural justice; or proceeds to act under a law which is itself ultra vires or unconstitutional. Since the basis of the claim for the relief is found not to exist, the High Court rightly refused the prayer for the issue of a writ of prohibition restraining the Authorities from continuing the proceedings pursuant to the notices issued. As indicated by this Court in State of Uttar Pradesh v. Brahm Datt Sharma [(....
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.... judicial review, under Article 226 of the Constitution of India, can be exercised where challenge to a show cause notice is made provided it is patently demonstrated that the same is issued without jurisdiction or it does not disclose any offence to have been committed. Ordinarily High Court should not embark to decide the factual disputes but relegate the party to submit the reply before the authority concerned who is obliged to decide the same. The aforesaid rule is, however, not free from exception. The exception, carved out in the case of Indian Cardboard Industries Limited vs. Collector of Central Excise reported in 1992 (58) E.L.T. 508(Cal.), in our opinion, still holds the field. The aforesaid exception can be aptly quoted hereunder : "15. On the basis of the decisions cited it appears that the court in exercise of its jurisdiction under Art. 226 of the Constitution will interfere with a show cause notice in the following circumstances : (1) When the show cause notice ex facie or on the basis of admitted facts does not disclose the offence alleged to be to be committed; (2) When the show cause notice is otherwise without jurisdiction; (3)....
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....g with the notice under Section of the Act, a summary thereof electronically in form GST DRC - 01, the quick reply was that Rule 142(1)(a) is ultra vires as a result of excessive delegation. Rule 142 is specifically with respect to "notice and order for demand of amounts payable under the Act". We find no merit in the contention of Mr. Poddar that Rule 142(1)(a) is invalid in any manner. 25. A rule under delegated legislation can be held to be ultra vires the statutory provisions of the Act if it is shown : (i) that it is beyond the scope of or in excess of the rule­making power of the delegate conferred under the Act, or (ii) that it is in conflict with or repugnant to any enactment in the Act. 26. The question whether any particular legislation suffers from excessive delegation has to be decided having regard to the subject matter, the scheme, the provisions of the Statutes including its preamble and the facts and circumstances in the background of which the Statute is enacted. (See Registrar, Co­operative Societies vs. K. Kunjabmu, AIR 1980 SC 350 and State of Nagaland v. Ratan Singh, AIR 1967 SC 212). It is also well settled that in considering t....