TaxTMI 
TaxTMI 
2025 (12) TMI 85
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....espondents : Mr Tahir Majid Shamsi, DSGI with Ms Rehana Qayoom, Adv. for R-1 to 3., Mr. Waseem Gul, GA for R-4 with Mr. Mohd Younus Hafiz, AC & Ms. Nowhabar Khan, AC JUDGMENT PER SANJEEV KUMAR, J. 1. In this batch of petitions, the petitioners invoke the extraordinary writ jurisdiction vested in this Court under Article 226 of the Constitution of India to throw challenge to the show cause notices issued to them by the Superintendent, CGST and CX Range-I, Srinagar, under Section 74(1) of the Central Goods and Services Tax Act, 2017 ["CGST Act of 2017"], read with the J&K Goods and Services Act, 2017 ["J&K GST Act of 2017"). 2. In some of the petitions, the competent authority of the respondents has confirmed the demand. Admittedly, the petitioners, having statutory remedies under both the legislations, have chosen to invoke the writ jurisdiction of this Court on the ground that the impugned notices are without jurisdiction and, therefore, availability of alternative statutory remedy is no bar to the entertaining of the writ petitions. It is in this background, the learned counsel for the petitioners has made his submissions to persuade us to hold that the show cause noti....
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....2017 were promulgated. Both the legislations came into operation with effect from 8th July, 2017. Admittedly, there was no provision under these legislations akin to Section 5 of the J&K VAT Act, 2005. The petitioners, as they claim, treated cross-LoC trade as a zero-rated sale, attracting no sale tax, did not indicate their cross-LoC transactions in their return, nor did they pay any sales tax on this account. This happened in the financial years 2017-2018 and 2018-2019. 8. The respondent authorities, having received information from the Office of DGGI, JRU, Jammu, initiated investigations against the petitioners to probe as to whether the petitioners had paid GST on their outward supply of goods to PoK during cross-LoC trade and also on the inward supplies received from PoK upto 12th October, 2017. It seems that the Superintendent, CGST and CX Range Srinagar, called for trade-wise, item-wise details of goods traded out and the goods traded-in, in respect of each cross-LoC traders for the period with effect from 8th of July, 2017, to 7th of March, 2019. 9. Upon collection of the relevant material, it was found that there were huge outward and inward supplies affected by the ....
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....arious High Courts to hammer his point that bunching of notices for different financial years is not permissible in law. We will advert to these judgments later. 13. Per contra, Mr. Tahir Majid Shamsi, learned DSGI, appearing for respondents, supports the reasoning given by the Officer in the order confirming the demand and would submit that going by the provisions of CGST Act, 2017, the supplies to and from PoK in pursuance of cross-LoC trade conducted as per SOP 2008, are intra-state and taxable under CGST Act/SGST Act and that no exemption notification exists for cross-LoC barter trade. He would further submit that notice was issued under Section 74(1) of the CGST Act, 2017, for suppression of facts, the petitioners deliberately and wilfully suppressed the taxable supplies in GSTR-1, GSTR-3B and avoided payment of GST. 14. With regard to the limitation, Mr. Shamsi would submit that the due date for filing returns for the financial year 2018-2019 was till 31st December 2022 as is apparent from a notification dated 20th October, 2020, issued by the Government of India, Ministry of Finance (Department of Revenue) by notification number 80/2020-Central Tax, and the period for ....
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....t of India issued SOP on 20th October 2008. This cross-LoC trade was decided to commence on Srinagar-Muzaffarabad and Poonch-Rawalakote routes with effect from 21st October 2008. This was essentially a barter trade where there was no exchange of currency from either side. This cross-LoC trade was between the people living across LoC i.e., trade between two parts of the State of Jammu and Kashmir, one, the then 'State of Jammu and Kashmir' and the other 'Pak occupied Kashmir'. 18. "Intra-state supply of goods" is defined in Section 2 (64) of the CGST Act of 2017 in the following manner :- (64) "intra-State supply of goods" shall have the same meaning as assigned to it in section 8 of the Integrated Goods and Services Tax Act; 19. Section 8 of the Integrated GST Act of 2017 reads as under:- (1) Subject to the provisions of section 10, supply of goods where the location of the supplier and the place of supply of goods are in the same State or same Union territory shall be treated as intra-State supply: Provided that the following supply of goods shall not be treated as intra-State supply, namely:- (i) supply of goods to or by a Special Economi....
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....ory of the Union:- (1) India, that is Bharat, shall be a Union of States. (2) The States and the territories thereof shall be as specified in the First Schedule. (3) The territory of India shall comprise- (a) the territories of the States; (b) the Union territories specified in the First Schedule; and (c) such other territories as may be acquired. 23. To better understand, it would also be appropriate to refer to the definition of State as given in Section 2 (103) of the JK GST Act of 2017 which reads thus: "Section 2 (103) "State" means the State of Jammu and Kashmir". 24. It is not disputed by learned counsel appearing on either side that the area of the State presently under de-facto control of Pakistan is part of territories of the State of Jammu & Kashmir. Therefore, in the instant case the location of the suppliers and the place of supply of goods were within the then State of Jammu Kashmir (now Union Territory) and, therefore, the cross-LoC trade affected by the petitioners during the tax period in question was nothing but an intra-state trade. We appreciate the fair stand taken by the learned senior counsel appeari....
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.... under subsection (1) or, as the case may be, the statement under sub-section (3), pay the amount of tax along with interest payable thereon under section 50 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 sub-section (1) or, as the case may be, the statement under sub-section (3), 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 proper officer is of the opinion that the amount paid under sub-section (5) falls short of the amount actually payable, he shall proceed to issue the notice as provided for in sub-section (1) in respect of such amount which falls short of the amount actually payable. (8) Where any person chargeable with tax under sub-section (1) or sub-section (3) pays the said tax along with interest payable under section 50 within thirty days of issue of show cause notice, no penalty shall be payable and all proceedings in respect of the said notice shall be deemed to be ....
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....section (3) shall be deemed to be service of notice under sub-section (1) of section 73, subject to the condition that the grounds relied upon in the said statement, except the ground of fraud, or any wilful-misstatement 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 sub-section (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 proper officer is of the opinion that the amount paid under sub-section (5) falls short of the amount actually payable, he shall proceed to issue the notice as provided for in sub-section (1) in res....
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....x has not been paid or short paid or erroneously refunded, or where input tax credit has been wrongly availed or utilized for any reason "other than the reason of fraud or any willful mis-statement or suppression of facts" to evade tax. Whereas Section 74(1) can be invoked by the proper officer where any tax has been paid or short paid or erroneously refunded or their input tax credit has been wrongly availed or utilized "by reason of fraud or any willful mis-statement or suppression of facts" to evade tax. 27. From reading of the two provisions in juxtaposition, the difference in the two is clearly visible. If the evasion of tax has taken place because of fraud or any willful mis-statement or suppression of facts, Section 74 would be attracted and the proper officer shall serve a notice on the person chargeable with tax which has not been paid or which has been short paid or to whom the fund has been erroneously made or who has wrongly availed or utilized input tax credit requiring him to show cause as to why he should not pay the amount specified in the notice along with interest and penalty. This notice is required to be served by the proper officer at least six months prior ....
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....the Noticee neither assessed their GST liability correctly, nor they discharged their due GST liability and suppressed the facts from the Department with sole intention to evade payment of GST. 6(b) Had the Department not initiated enquiry and investigation against the Noticee evidencing the Noticee's indulgence into evasion of the GST by short payment of GST, the evasion would have remained unearthed. In view of the discussion supra, it appears that the Noticee willfully contravened the provisions of the CGST Act and the J&K SGST Act, by not paying the due GST on cross LoC-barter trade during financial year 2018-19. As such, GST amount of Rs. 1,23,400/- appears to be recoverable from the party under Section 74 of the CGST Act 2017 and Section 74 of the J&K SGST Act 2017 along with interest payable thereon under Section 50 of the Acts and penalty equivalent to the tax. 30. From careful reading of the above paras of the impugned show cause notice, it clearly comes out that there was prima face suppression of material facts by the petitioners and that the petitioners were well aware that there was no specific notification issued by the Government under Section 11 of the C....
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....five years from the date of erroneous refund." 34. From reading of Section 74(2), it clearly transpires that a notice under sub-section (1) of Section 74 is required to be issued by the proper officer within six months prior to the time limit specified in sub-section (10) for issue of order. Sub-section (10), however fixes a period of five years for passing an order under sub-section (9) from the due date for furnishing of annual return for the financial year to which the tax not paid or short paid etc. relates. As we have discussed hereinabove and is also a clear stand taken by respondents that the notice impugned was issued to the petitioners at least six months prior to the expiry of five years from the date due for furnishing the annual return for the financial years in question. 35. In the instant case, the due date for furnishing the annual return for the financial year 2017-2018 was extended upto 5th February 2020, whereas it was so extended for 2018-2019 upto 31st December 2020. In all these cases, the impugned show cause notices have been issued on 4th August 2024, i.e., well six months prior to the expiry of five years from the due date for furnishing annual returns....
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....ed for any part of the notice; (5) Where the court finds that clubbing of notices for two or more financial years has caused prejudice to the assessee and is in violation of principles of natural justice. 41. When we examine the show cause notices issued to the petitioners in the instant cases, we find that there is year-wise quantification of the liability and the allegations are prima facie, cogent and detailed one, giving fair opportunity to the assesses to respond and defend themselves. We have also found that the show cause notices in respect of both the periods, i.e., Financial Years 2017-2018 and Financial Year 2018-2019, are not hit by the limitation prescribed under Section 74(2) read with Section 74(10) of the CGST Act, 2017. 42. Viewed thus, it cannot be said that in the instant case, the bunching of composite show cause notice issued in respect of tax periods falling in mentioned year 2017-2018 and mentioned year 2018-2019 is impermissible and liable to be interfered with. Q. No. 6. Availability of statutory remedy of appeal under Section 107 of the CGST Act of 2017. 43. Having found that the show cause notices issued to the petitioners are not prim....
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....utional law as they still hold the field." 46. The position of law is reaffirmed in a recent judgment of the Hon'ble Supreme Court in the case of M/s. Radha Krishan Industries vs. State of Himachal Pradesh and Ors [AIR 2021 Supreme Court 2114]. The Hon'ble Supreme Court once again revisited the entire case law on the point and culled-out in para 27 thereof the following principles:- (i) The power under Article 226 of the Constitution to issue writs can be exercised not only for the enforcement of fundamental rights, but for any other purpose as well; (ii) The High Court has the discretion not to entertain a writ petition. One of the restrictions placed on the power of the High Court is where an effective alternate remedy is available to the aggrieved person; (iii) Exceptions to the rule of alternate remedy arise where (a) the writ petition has been filed for the enforcement of a fundamental right protected by Part III of the Constitution; (b) there has been a violation of the principles of natural justice; (c) the order or proceedings are wholly without jurisdiction; or (d) the vires of a legislation is challenged; (iv) An alternate re....