TaxTMI 
TaxTMI 
TaxTMI 
2026 (1) TMI 146
X X X X Extracts X X X X
X X X X Extracts X X X X
....d appeal order dated 18.03.2024 under Section 74 of the Goods and Services Tax Act, 2017 (hereinafter called as "the Act"). 2.2 The petitioner is a limited company, incorporated under the Companies Act, 1956, and engaged in manufacturing and trading automotive tyres, tubes and flaps. Initially, the impugned show cause notice dated 20.04.2022 was issued by the respondents against the petitioner with regard to the validity of earlier tax payment method and proposing penalties. Upon receipt of the said notice, a reply was filed by the petitioner on 28.04.2022. However, without considering the said reply, the original order dated 27.04.2023 was passed by the 4th respondent. Aggrieved over the said original order, an appeal was preferred by the petitioner, however, without proper consideration, the said appeal was also rejected by the 5th respondent vide impugned order dated 18.03.2024. Hence, this petition. 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, whe....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... Subsequent to the receipt of the said information only, the respondents had initiated the investigation. In such case, the provisions of Section 39(9) would not apply in the present case. 2.8 Further, the petitioner had started the process of paying the amount from 12.01.2019 itself and thus, at any cost, the respondents cannot take a stand that the show cause notice under Section 74 of GST was issued against the petitioner by application of provision of Section 39(9) of the Act. 2.9 That apart, as on the date of passing of original order, under Section 74, there was no tax dues on the part of the petitioner. However, the said aspect was not at all taken into consideration by the 4th respondent while passing the impugned original order dated 27.04.2023. 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 su....
X X X X Extracts X X X X
X X X X Extracts X X X X
....t to the investigation of DGGI conducted on 21.01.2019. Therefore, the petitioner's case would certainly attract the provisions of Section 74 of the Act. 3.3 He would also submit that in terms of the provisions of Section 39(9), if any registered person, after furnishing a return, discovers any omission or incorrect particulars therein, other than as a result of scrutiny, audit, inspection or enforcement activity by the tax authorities, he shall rectify the same. In this case, as stated above, the shortage amount was remitted by the petitioner subsequent to the investigation of DGGI. When such being the case, 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. Consequently, the original and appeal orders were also passed. Hence, he prays for dismissal of this 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 12.01.2019 itself. The said amount wa....
X X X X Extracts X X X X
X X X X Extracts X X X X
....fect 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 Favoid 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 petitioner was communicated to the respondents vide communication dated 12.01.2019. Accordingly, the arrears of tax amount, along with interest, was remitted to the respondents during the month of May 2022. 9. However, the acceptance of the petitioner that the subject supply is a "composite supply" with the intention to buy peace, will not exclude the jurisdiction of this Court to decide the issue as to whether the subject supply is "composite supply" or "individual supply". Further, such a mere admission would not disentitle the peti....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... 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 with 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 attract the provisions of Section 74 of the Act. 14. In this case, as stated above, the petitioner had voluntarily come forward and stated that the supply of TTF effected by them is a "c....
X X X X Extracts X X X X
X X X X Extracts X X X X
....rect 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 during the month of May 2022, 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 thus, 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 12.01.2019, 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 disclosed the short payment vide the aforesaid communication. 20. That apart, the short payment on the part of the petitioner had ....