2024 (12) TMI 1290

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....uments and information were sought from the Petitioner. The Petitioner duly complied with all the requirements during these proceedings. 3. Subsequently, Respondent No. 3 issued a Show Cause Notice (hereinafter referred to as 'SCN') dated August 3, 2024, under Section 74 (1) of the CGST Act, 2017, read with Section 20 of the Integrated Goods and Services Tax (IGST) Act, 2017. The SCN sought recovery of Rs. 1,05,11,99,662 in GST, along with interest under Section 50 and an equivalent penalty under Section 74 (1) of the CGST Act, 2017. 4. The SCN contains several allegations against the Petitioner. First, it accuses the Petitioner of wrongfully availing the benefit of an exemption on the supply of "Kulcha" by misclassifying it as "bread" under S. No. 97 of Notification No. 02/2017-Central Tax (Rate) dated June 28, 2017. 5. Additionally, the SCN denies the reduction of the Petitioner's outward tax liability based on credit notes issued for deficient services and destroyed goods. This denial is grounded on the claim that the corresponding Input Tax Credit (ITC) was not reversed by the suppliers or recipients of such goods, as required under Section 34 of the CGST Act. 6. Fu....

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....2021. Despite this, the SCN was issued on August 03, 2024, after the normal limitation period had expired for FY 2017-18 to FY 2019-20. Such delay has been condemned by the Hon'ble Supreme Court in Commissioner of C. Ex., Mangalore v. Pals Microsystems Ltd. reported in 2011 (270) ELT 305 (SC). 12. Moreover, the absence of pre-SCN intimation in Form GST DRC-01A renders the proceedings procedurally defective. Rule 142 (1A) of the CGST Rules mandates issuance of DRC-01A before initiating proceedings under Section 74. The omission of this step vitiates the validity of the SCN, as held in M/s New Morning Star Travels v. The Deputy Commissioner (S.T.) & Ors. reported in 2023 (79) G.S.T.L. 430 (A.P.). 13. The extended limitation period in the SCN pertains solely to the classification of Kulcha and does not extend to issues related to credit notes. The demand raised regarding credit notes hinges on the alleged non-compliance with a circular dated June 26, 2024, which imposes additional requirements beyond the statutory provisions of Section 34. This interpretation is incorrect as Section 34 does not mandate proof of ITC reversal by the recipient. The Hon'ble Supreme Court in Suchitra....

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....r goods and availed ineligible ITC with mala fide intent to evade tax. Thus, the extended period of limitation has been correctly invoked by Respondent No. 3 as per the law. 18. The issues of limitation, exemption and classification are mixed questions of law and fact that fall under the jurisdiction of the adjudicating authority. In this regard, reliance has been placed by the respondent authorities on several judgments. In Aloke Bhowmick v. Additional Commissioner, CGST & CX Kolkata South Commissionerate in (MAT No. 298 of 2022), it was held by the Hon'ble Calcutta High Court that determining whether an SCN is time-barred or involves suppression is a factual issue requiring adjudication by the issuing authority. Similarly, in J.S Pigments Pvt. Ltd v. Commissioner of CGST and Central Tax, Howrah reported in (2022) 381 ELT 45 (Cal.), the Court reiterated that extended limitation under Section 11A of the Act involves mixed questions of law and fact. Further, in D.C.L. Polyester Ltd v. Collector of Central Excise and Customs, Nagpur reported in (2005) 181 ELT 190 (SC), it was held that determining whether a product falls within a tariff entry is also a mixed question of law and fa....

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....s submit that the SCN has been issued lawfully and all allegations, including wilful misclassification and suppression of facts, have been substantiated through a thorough investigation. The extended period of limitation is applicable and the proceedings must continue as per the CGST Act, 2017. 24. Upon a thorough examination of the documents presented to the Court and taking into account the arguments put forth by the parties, this Court finds that the writ petition is not maintainable. This Court shall refrain from adjudicating or delving into the merits of the case as the issues raised in the present writ petition pertain to complex questions of fact and law that are squarely within the jurisdiction of the adjudicating authority under the Central Goods and Services Tax (CGST) Act, 2017. The petitioner's grievances primarily relate to the invocation of the extended period of limitation, allegations of misclassification of goods and denial of Input Tax Credit (ITC). Each of these issues necessitates a detailed factual inquiry, which is outside the purview of this Court in its writ jurisdiction. 25. In Aloke Bhowmick (supra) it was held: "2. The issue as to whether t....