TaxTMI 
TaxTMI 
TaxTMI 
2024 (2) TMI 588
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....3 [impugned Show Cause Notice], has also sought for further reliefs which read as under: "c) To issue order(s) or directions in the nature of Mandamus holding that reversal under Section 17(5)(h) of the CGST Act, 2017 cannot be sought on presumptive basis by the Respondent No. 1; d) To issue order(s) or directions in the nature of Mandamus holding that the Petitioner is neither liable to pay interest under Section 50 of the CGST Act nor can penalty under Section 122(2)(a) can be imposed on them; e) To issue order(s) or directions in the nature of Certiorari quashing endorsement notice issued by Respondent No. 3 from File No. Adcom/Enf/SZ/ACCT-24/INS-20/2022- 23 dated 03.08.2022 at Annexure-F as arbitrary, vague and in contradiction to the provisions of the CGST/KGST and violative of Article 265 of the Constitution." The impugned Show Cause Notice has two parts viz., Part -I, which relates to Input Tax Credit [ITC] availed but disallowed for not complying with the requirements of Section 16(2) and Section 15 of the CGST Act and the relevant Rules, and Part - II, which relates to alleged short declaration of Outward Supply and excess claim of ITC in Karnataka. 3. Sri. G. Sh....
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....nt has in effect opined that the petitioner's sales could not have been for a value lesser than the value of Inward Supply and therefore, the value of the Outward Supply must be taken with an addition of 10% thereof as profit to determine whether there is short payment of tax. 7. Sri. G. Shivadass submits that the petitioner's specific case is that it does not maintain a uniform pricing range across India as a matter of effective business practice and the price charged to its end customers will vary depending on the place of sale and time of sale, and that the petitioner has filed Returns as required under the provisions of KGST Act declaring sales turn over based on the actual realization of the price [transactional price] from the customers in Karnataka without any addition of any kind and none of such customers are related parties. 8. Sri. G. Shivadass further submits that upon receipt of this Investigation Endorsement, the petitioner has filed reply on 10.08.2022 setting forth the circumstances such as above and asserting that the dispositive fact, given the provisions of Section 15(1) of the KGST Act, would be the transactional value without any addition, and that the procee....
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....ny manner, submits that the petitioner cannot have any grievance with the issuance of the impugned Show Cause Notice as the petitioner would have the advantage of filing appropriate response before the liability is crystallized as contemplated under Section 73(9) of the KGST Act. Sri Shamanth Naik also endeavors to persuade this Court to accept that the first respondent is justified in assuming jurisdiction to issue notice under Section 73(1) of the KGST Act when the officer, on receipt of formal information, could opine that there is short payment of tax as contemplated under Section 73 of the KGST Act. 13. The rival submissions are considered and the questions for examination by this Court will be: [a] Whether this Court can opine that the first respondent has considered the reply filed on 27.09.2023 by the petitioner in response to the intimation in FORM GST DRC-01A dated 22.09.2023, [b] If reasonably it could be opined that such reply has not been duly considered, should the proceedings be restored to the stage of reply to FORM GST DRC-01A for further consideration in the light of the petitioner's specific stand that the question of limitation will not be raised. 14. Th....
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....o as 'KGST Rules'). In respect of such supplies, there can be no redetermination of supply value by adding a notional value of 10% gross profit on the cost of goods sold and services rendered. iv. Further the impugned endorsement applies a uniform rate of 18% on the purported short-declared value of the outward supply whereas the Company, for the period under consideration, was involved in supplying goods and services attracting different rates of GST, viz. 5%, 12%, 18%.28%, etc. v. Additionally, the Company majorly deals with electronic products which operate on thin margins across the industry owing to various external factors like imports, competitive environment, etc. Hence, applying an adhoc gross profit of 10% on the cost of goods sold and services rendered, which is not prescribed under any of these provisions of GST law is completely baseless and not legally sustainable." 15. The intimation in Part A of FORM GST DRC - 01A is issued on 22.09.2023 reiterating the figures but without any reason on how the petitioner's contention in response to the Endorsement dated 03.08.2022 [that the transaction value will be dispositive] is not relevant. Further, the petitio....
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....iled in Part B of Form GST DRC - 01A. 18. Perhaps there could be some debate on the merits of the change in Rule 142(1A) in providing that the Proper Officer may communicate the details in Part A of FORM GST DRC - 01A before issuance of notice under Section 73(1) of the GST Act, but there cannot be any debate about the requirement that once the intimation is issued in Part A of FORM GST DRC-01A communicating the details of any tax, interest and penalty as ascertained and submissions are filed in Part B of Form GST DRC 01A under Rule 142(2A) against such proposal, the proper officer must reason why the submissions filed cannot be accepted before assuming jurisdiction to issue notice under Section 73(1) of the GST [or under Section 74(1) or the other provisions mentioned in Rule 142(1A)]. This would be crucial because of the consequences of penalty under Section 73 of the GST Act. 19. This Court must opine that if indeed the petitioner has filed submissions, as part of its submissions in Part B of FORM GST DRC - 01A, asserting that it has offered different prices [for the same supply of goods and services] at different places and declared Returns accordingly, the implication thereo....