TaxTMI 
TaxTMI 
2026 (4) TMI 1214
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....llenging the validity of the impugned show cause notices both dated 8th August 2024 issued by the Additional Commissioner, Central Excise and Central Goods Services Commissionerate, Udaipur (herein after referred to as Respondent No. 1) under Section 74 of the Central Goods and Services Act, 2017 (hereinafter referred to as CGST Act) and Section 11A with 11AA and 11AC of the Central Excise Act, 1944 (hereinafter referred to as Central Excise Act) proposing the demand of GST of Rs. 195,06,61,336/- and Central Excise Duty of Rs. 71,34,39,871/- along with interest and equivalent penalty. 2. The brief facts leading to filing of the petition are that the Petitioner filed an application for Advance Ruling under Section 97 of the Rajasthan Goods and Services Act (hereinafter referred to as RGST Act) before Rajasthan Authority For Advance Ruling, Goods And Services Tax, Jaipur (hereinafter referred to as AAR) seeking an Advance Ruling with respect to the classification of its product as unmanufactured tobacco pre-mixed with lime (i.e., supplied without lime tube) under the brand name 'Keer Kokil' (the Product intended to be sold by the Petitioner) under GST and the rate of GST and C....
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....y on the same allegations that were raised before AAR and Appellate Authority that the Advance Ruling was obtained by fraud, misrepresentation and suppression of facts. SUBMISSIONS ON BEHALF OF THE PETITIONER 10. At the outset it is submitted by the counsel for the petitioner that the petitioner is a bona fide, tax-compliant entity that has consistently discharged GST in accordance with the Advance Ruling, which classified its product as 'unmanufactured tobacco' under CTH 2401 2090- "others", attracting 28% GST and 71% Compensation Cess. At the time of seeking the ruling, the petitioner had made full and complete disclosure of all relevant facts, including the manufacturing process, use of machines, and addition of aroma and menthol. These aspects were specifically examined by both the AAR and the jurisdictional officer, who concurred that such processes do not alter the essential character of the product. It is stated that even the Respondent No. 4, being the Jurisdictional Officer of the Petitioner, in his comments recognised use of machines and stated that there will be no change in the nature of the Product after adding a little aroma and menthol. 11. The Advance Rulin....
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....ether the Advance Ruling is being correctly followed and to reclassify goods if additional or undisclosed ingredients or processes amount to a substantial deviation. Classification depends on the actual manufacturing process and product characteristics, irrespective of earlier declarations, and such action does not require setting aside the Advance Ruling but is part of lawful tax administration. 16. It is also submitted that the show cause notices have been issued strictly in accordance with the GST law to address discrepancies, notwithstanding prior rulings. An Advance Ruling does not bar fresh proceedings where subsequent facts indicate non-compliance or misrepresentation. Use of machines and addition of aroma or menthol, if not disclosed, constitute valid grounds for investigation and reclassification, amounting to fraud or suppression. The notices are based on fresh findings and are distinct from earlier proceedings, justifying invocation of Section 74 of the GST Act and Section 11A of the Central Excise Act. 17. The counsel contends that although the petitioner obtained an Advance Ruling classifying its product 'Keer Kokil' as unmanufactured tobacco under CTH 2401 2090-....
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....een conferred by statute, the fact that the aggrieved party has another and adequate remedy may be taken into consideration by the superior court in arriving at a conclusion as to whether it should, in exercise of its discretion, issue a writ of certiorari to quash the proceedings and decisions of inferior courts subordinate to it and ordinarily the superior court will decline to interfere until the aggrieved party has exhausted his other statutory remedies, if any. But this rule requiring the exhaustion of statutory remedies before the writ will be granted is a rule of policy, convenience and discretion rather than a rule of law and instances are numerous where a writ of certiorari has been issued in spite of the fact that the aggrieved party had other adequate legal remedies." 22. In the recent judgment passed in J. Sri Nisha Vs. The Special Director [2026 INSC 309] the Hon'ble Apex court relying on Union Of India Vs. VICCO Laboratories [(2007) 13 SCC 270] has clearly held that interference at the stage of SCN is permissible where the notice suffers from patent lack of jurisdiction, reflects non-application of mind, is issued with a pre-determined or premeditated approach, amo....
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....inly in that case, the writ court would not hesitate to interfere even at the stage of issuance of show-cause notice. The interference at the show-cause notice stage should be rare and not in a routine manner. Mere assertion by the writ petitioner that notice was without jurisdiction and/or abuse of process of law would not suffice. It should be prima facie established to be so. Where factual adjudication would be necessary, interference is ruled out." 23. In the present case, the petitioner contends that the impugned show cause notices have been issued on grounds which were already considered by the Authority for Advance Ruling, and that proceedings under Section 104 as well as the appellate proceedings have culminated against the Revenue. Prima facie, these submissions raise a substantial issue as to whether the impugned notices seek to reopen matters that have already attained finality. 24. In such circumstances, and in view of the settled position of law that a writ petition is maintainable where a show cause notice is alleged to be without jurisdiction, issued with a pre-determined approach, or amounts to an abuse of process of law, this Court finds it appropriate to ent....
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....arded. 29. The Hon'ble Apex Court in National Cooperative Development Corporation vs. CIT [(2021) 11 SCC 357] emphasized that a robust Advance Ruling system reduces litigation and promotes tax certainty, and cautioned that it should not become another stage of litigation. It was held as under :- "55. In our opinion, a vibrant system of Advance Ruling can go a long way in reducing taxation litigation. This is not only true of these kinds of disputes but even disputes between the taxation department and private persons, who are more than willing to comply with the law of the land but find some ambiguity. Instead of first filing a return and then facing consequences from the Department because of a different perception which the Department may have, an Advance Ruling System can facilitate not only such a resolution, but also avoid the tiers of litigation which such cases go through as in the present case. In fact, before further discussing this Advance Ruling System, we can unhesitatingly say that, at least, for CPSEs and Government authorities, there would be no question of taking this matter further once an Advance Ruling is delivered, and even in case of private persons....
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....ment or suppression of facts are concerned, they are clearly qualified by the word 'willful', preceding the words "mis-statement or suppression of facts" which means with intent to evade duty. The next set of words 'contravention of any of the provisions of this Act or Rules' are again qualified by the immediately following words 'with intent to evade payment of duty.' Therefore, there cannot be suppression or mis-statement of fact, which is not willful and yet constitute a permissible ground for the purpose of the proviso to Section 11A. Mis-statement of fact must be willful." 31. Thus, the existence of fraud, willful misstatement or suppression of facts is not merely a matter for adjudication, but constitutes a jurisdictional pre-condition for invoking Section 74 of the CGST Act. While it is true that the department is not precluded from initiating proceedings where there is a genuine change in facts or discovery of new material, such power cannot be exercised to re-open or re-agitate issues which have already been examined and conclusively decided by a competent authority. 32. In the present case, upon consideration of the record, it is evident that the petitioner is compl....
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.... the assessee was not tenable and that, if it was accepted, the Revenue would suffer. But what Sri Reddy overlooks is that we are not concerned here with the correctness or otherwise of their conclusion or of any factual malafides but with the fact that the officers, in reaching in their conclusion, by-passed two appellate orders in regard to the same issue which were placed before them, one of the Collector (Appeals) and the other of the Tribunal. The High Court has, in our view, rightly criticised this conduct of the Assistant Collectors and the harassment to the assessee caused by the failure of these officers to give effect to the orders of authorities higher to them in the appellate hierarchy. It cannot be too vehemently emphasised that it is of utmost importance that, in disposing of the quasi-judicial issues before them, revenue officers are bound by the decisions of the appellate authorities; The order of the Appellate Collector is binding on the Assistant Collectors working within his jurisdiction and the order of the Tribunal is binding upon the Assistant Collectors and the Appellate Collectors who function under the jurisdiction of the Tribunal. The principles of judicia....
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....e remedy is also in the hands of the same officer. He has only to bring the matter to the notice of the Board or the Collector so as to enable appropriate proceedings being taken under Section.35-E (1) or (2) to keep the interests of the department alive. If the officer's view is the correct one, it will no doubt be finally upheld and the Revenue will get the duty, though after some delay which such procedure would entail. 8. We have dealt with this aspect at some length, because it has been suggested by the learned Additional Solicitor General that the observations made by the High Court have been harsh on the officers. It is clear that the observations of the High Court, seemingly vehement, and apparently unpalatable to the Revenue, are only intended to curb a tendency in revenue matters which, if allowed to become widespread, could result in considerable harassment to the assesses-public without any benefit to the Revenue. We would like to say that the department should take these observations in the proper spirit. The observations of the High Court should be kept in mind in future and the utmost regard should be paid by the adjudicating authorities and the appellat....