TaxTMI 
TaxTMI 
TaxTMI 
2025 (12) TMI 1442
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.... 1956, and it is a listed company in India as well as abroad. The impugned show cause notice was issued by the 1st respondent against the petitioner with regard to the wrongful availment of ITC and for calling upon the petitioner to payback a sum of Rs.78 Crores. The issuance of said notice, had caused adverse impact on the stock values of the petitioner-Company. 2.3 He would submit that in this case, the petitioner made a supply of tyres, tubes and flaps (TTF) in a carry strapping form. As on the date of introduction of GST, i.e., with effect from 01.07.2017, all the three items are chargeable to GST at the rate of 28%. Therefore, whenever they effected the supply, they had raised separate invoices for each items and send it to the manufacturers. 2.4 He would also submit that for the purpose of convenience, the tyres, tubes and flaps are sent together by rising separate invoices. Therefore, at no point of time, the aforesaid items were supplied under a single invoice treating it as a "composite supply". Under these circumstances, with effect from 15.11.2017, the rate of duty against the tube was reduced from 28% to 18%. Likewise, from 01.01.2019, the duty liability of the fl....
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....e of issuance of show cause notice under Section 74, there was no tax dues on the part of the petitioner, in such case, once the entire tax amount is paid, no notice, under Section 74 of the Act, can be issued in terms of Section 74(5) & 74(6) of the Act. Hence, he would contend that the proceedings were initiated by the respondents by wrongly invoking the provisions of Section 74 of the GST Act, 2017 and subsequently, the impugned show cause notice was issued without satisfying the ingredients stated in the said provisions. When such being the case the issuance of the said show cause notice itself is illegal and the same is liable to be set aside. 2.10 Further, he would submit that Directorate of Revenue Intelligence (DRI) will have so many works to be looked into. Therefore, even in the worst situation, the confusion, which was prevailed on the aspect of application of tax rates for the goods, was cleared among the industries, i.e., not only with the petitioner but also the other industries, and accordingly, to avoid any further legal action and to buy peace, the TTF supply was construed as a "composite supply", for which the tax amount was calculated at the rate of 28% and th....
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....ase, certainly, bar under the provisions of Section 39(9) would come into picture and accordingly, the impugned show cause notice was issued against the petitioner for wrongful availment of ITC. 3.4 Further, he would contend that when a similar issue arises, the Apollo Tyres had filed their reply before the Assessing Officer and after the passing of original order, they had also preferred an appeal against the same. However, the said appeal was also rejected. Under these circumstances, only after exhausting the alternate remedy, they are finally landing before this Court vide WP.No.20449 of 2024. In such case, the petitioner shall also file their reply to the impugned show cause notice before the concerned Authority. However, without doing so, the petitioner had directly approached this Court at the show cause notice stage itself. Hence, he requests this Court to dismiss the present petition. 4. Petitioner's reply: 4.1 In reply, the learned Senior counsel appearing for the petitioner would submit that in this case, the petitioner's inclination with regard to the payment of tax has been communicated to the respondents well in advance i.e., on 05.01.2019 itself. The ....
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....materials available on record. 6. Now, the issue that has to be decided in this case is as to whether the issuance of the impugned show cause notice dated 07.04.2022, have fulfilled the ingredients of Section 74 of the Act? 7. In this case, initially, the petitioner-company have been supplying the goods, viz., tyres, tubes and flaps (TTF) directly to the manufacturers. As on the date of introduction of GST, i.e., with effect from 01.07.2017, all the three items are chargeable to tax at the rate of 28%. Subsequently, with effect from 15.11.2017, the rate of duty against the tube was reduced from 28% to 18%, likewise, from 01.01.2019, the duty liability of the flaps was reduced from 28% to 18%. 8. In the subject supply, the tubes and flaps were kept inside the tyres and wrapped together. Thereafter, supply was effected. According to the petitioner, a mere wrapping up would not amount to natural bundling of the goods, so as to consider it as a "composite supply". However, to avoid further confusion, the petitioner had treated that the supply of TTF in a carry strapping form is a "composite supply" and offered to pay the tax at the rate of 28%. The inclination of the petitione....
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....show cause as to why he should not pay the amount specified in the notice along with interest payable thereon under section 50 and a penalty equivalent to the tax specified in the notice. 12. A reading of the above provision would show that this provision would apply only in the event of payment of tax, which is not paid or short paid or erroneously refunded or ITC wrongly availed or utilised by reason of fraud or any wilful misstatement or suppression of facts. When such being the case, the Authorities are supposed to have traced out as to whether there is any evasion of tax in the course of payment of tax dues, the intention of fraud or provision of wilful misstatement or suppression of facts. If the aspects of fraud, misstatement or suppression of facts were not established while issuing the show cause notice, the same would be considered as issued without fulfilling the ingredients of Section 74 of the Act and such notice is liable to be set aside as the same was issued without jurisdiction. 13. Now, let this Court examine the issue as to whether there is any fraud, wilful misstatement or suppression of materials facts involved in the petitioner's case, so as to attra....
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....s, he shall rectify such omission or incorrect particulars in the return to be furnished for the month or quarter during which such omission or incorrect particulars are noticed, subject to payment of interest under this Act:" 18. A perusal of the above would makes it clear that an assessee can be permitted to rectify the returns in the events other than scrutiny, audit, inspection or enforcement activity by the tax authorities and avail ITC. According to the respondents, the petitioner made payment of tax dues on 21.02.2019, which is subsequent to the enforcement activity, i.e., DGGI investigation dated 21.01.2019 and thus, it would clearly attract the provisions of Section 74 of the Act and disentitle the petitioner to avail ITC. 19. However, upon perusal of records, it is clear that the petitioner's inclination to make the payment of tax dues was communicated to the respondents as early as on 07.01.2019, which is much prior to the date of DGGI investigation. When such being the case, as stated above, no criminal motive, viz., fraud, wilful misstatement or suppression of material facts, can be attributed against the petitioner, since the petitioner had voluntarily discl....