9911796707🚨 Important Update for Our Users
We are transitioning to our new and improved portal - www.taxtmi.com - for a better experience.
Follow us:
|
Home
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2025 (6) TMI 1237 - HC - GSTChallenge to impugned order and summary of the order - availment of ineligible ITC from a fake/non-existent taxpayer - violation of provision of Section 16(2)(a) and Section 16 (2) (b) and Section 16 (2) (c) of the GST Act - time limitation - HELD THAT - So far as the issues which are covered by the audit conducted by the State Tax Authorities are concerned and the issue which are considered in the impugned Order-in-Original are disputed questions of facts as there is no matching of the issue which was considered by the State Tax Authorities on perusal of the Order-in-Original passed for 2017-18 which is placed on record in the impugned Order-in-Original dated 31.12.2024. Therefore it is not possible for this Court to consider the contentions of the Petitioner at this stage the Petitioner wishes that the same can be considered by preferring an appeal challenging the impugned order under Section 107 of the GST Act. So far as the aspect of invocation of jurisdiction of the extended period is concerned it is again the disputed question because the impugned order is dated 04.12.2024 whereas the same is uploaded on 13.08.2024 and therefore whether the said order can be said which is signed on 04.08.2024 is to be considered within the period of limitation as alleged by the Petitioner or not is also matter of examining the record. Therefore in the facts of the case without going into the merits of the matter and without referring to the decisions on merits as canvassed by learned advocate for the petitioner the petition is not entertained at this stage with a liberty to the Petitioner to challenge the impugned Order-in-Original before the Appellate Authority as provided under Section 107 of the GST Act. Conclusion - i) The writ petition challenging the show cause notice and Order-in-Original under Section 74 of the CGST Act was dismissed. ii) The Petitioner was granted liberty to pursue statutory appeal under Section 107 of the CGST Act. iii) No interference was made with the impugned order on merits or limitation grounds at this stage. Petition disposed off.
Issues Presented and Considered
The core legal questions considered by the Court include: 1. Whether the issuance of the show cause notice dated 04.08.2024 and the subsequent Order-in-Original dated 31.12.2024 under Section 74 of the CGST Act, 2017, was valid and within the prescribed time limits, particularly in light of the limitation period under Section 74(2) read with Section 74(10) of the CGST Act. 2. Whether the Respondent authority had jurisdiction to initiate proceedings under Section 74 of the CGST Act when the State Tax Authorities had already conducted audits and initiated assessment proceedings for the same period. 3. Whether the Petitioner had availed ineligible Input Tax Credit (ITC) from non-existent or ab-initio cancelled taxpayers, thus attracting provisions of Section 16(2)(a), (b), and (c) of the CGST Act. 4. Whether the invocation of extended period of limitation under Section 74 of the CGST Act was justified, particularly whether there was any material evidence of fraud, willful misstatement, or suppression of facts by the Petitioner to evade tax. 5. Whether the impugned Order-in-Original adequately considered the Petitioner's submissions and evidence, and whether the Petitioner was denied natural justice due to non-consideration of their replies and absence at hearings. 6. The applicability and effect of cross-empowerment provisions under Section 6 of the Gujarat GST Act, 2017, with respect to jurisdictional conflicts between Central and State Tax Authorities. 7. Whether the Petitioner's remedy lies in writ jurisdiction under Article 227 or Article 226 of the Constitution or whether the alternate statutory remedy under Section 107 of the CGST Act is appropriate. Issue-Wise Detailed Analysis 1. Validity and Timeliness of Show Cause Notice and Order-in-Original under Section 74 of the CGST Act Legal Framework and Precedents: Section 74(2) of the CGST Act prescribes a limitation period of five years for initiating proceedings in cases involving fraud or willful misstatement. Notification No. 6/2020 and Instruction No. 05/2023-GST clarify the due dates for filing returns and the conditions for invoking extended limitation. The Court also referred to authoritative precedents emphasizing limitation and procedural compliance. Court's Reasoning: The Petitioner contended that the show cause notice dated 04.08.2024 was issued beyond the limitation period for the financial year 2017-18, as the extended limitation would expire on 05.08.2024 and the notice was actually uploaded on 13.08.2024. The Court noted that the question of whether the order signed on 04.08.2024 but uploaded on 13.08.2024 is within limitation is a disputed factual issue requiring examination of the record. Application of Law to Facts: Since the limitation question involves examination of the timing and manner of issuance and upload of the notice, the Court refrained from deciding the issue at the writ petition stage. Conclusion: The Court held that the limitation issue is a disputed question of fact and is better suited for adjudication by the appellate authority rather than at the writ stage. 2. Jurisdiction of Respondent Authority in Light of State Tax Authorities' Prior Audit and Proceedings Legal Framework: Section 6 of the Gujarat GST Act authorizes officers appointed under the Central GST Act to act as proper officers under the State GST Act under specified conditions, including that no proceedings shall be initiated by one authority if already initiated by the other on the same subject matter. Court's Interpretation: The Court observed that the Respondent had considered Section 6 in the impugned order and found that the issues considered by the State Tax Authorities in their audit and assessment for 2017-18 did not match the issues raised by the Respondent in the impugned order. Therefore, the jurisdictional conflict was not absolute. Application of Law to Facts: The Court noted that since the issues are disputed questions of fact, it was not appropriate to decide jurisdictional conflict at this stage. Conclusion: The Court declined to interfere with the jurisdictional exercise by the Respondent authority at the writ stage and left the matter to be decided on appeal. 3. Allegation of Availing Ineligible ITC from Non-Existent or Cancelled Taxpayers Legal Framework: Sections 16(2)(a), (b), and (c) of the CGST Act restrict the availability of ITC in cases where the supplier has not paid tax or the invoice is fraudulent or fictitious. Section 74 is invoked in cases involving fraud or willful misstatement related to ITC. Court's Reasoning: The Petitioner submitted that the ITC availed was legitimate, supported by work orders and invoices, and that the information from the Central Investigation Bureau was incorrect. The Respondent authority held that the Petitioner availed ITC without receipt of goods or genuine invoices. Application of Law to Facts: The Court noted that no material was placed on record by the Petitioner to conclusively establish receipt of goods or genuineness of transactions. The Court refrained from deciding factual disputes at the writ stage. Conclusion: The Court left the factual determination regarding ITC eligibility to the appellate authority. 4. Invocation of Extended Period under Section 74 and Requirement of Fraud or Willful Misstatement Legal Framework: Section 74(1) of the CGST Act permits extended period proceedings only where there is fraud, willful misstatement, or suppression of facts to evade tax. Instruction No. 05/2023-GST reiterates that mere non-payment of tax without such elements does not justify invocation of Section 74. Court's Reasoning: The Petitioner argued that the Respondent failed to point out any element of fraud or willful misstatement. The Court noted that the impugned order did not specifically identify such elements and merely reproduced statutory provisions and conclusions. Application of Law to Facts: The Court observed that the question of whether fraud or willful misstatement existed is a disputed question of fact and cannot be decided at the writ stage. Conclusion: The Court declined to interfere and left the issue to be adjudicated on appeal. 5. Consideration of Petitioner's Submissions and Natural Justice Legal Framework: Principles of natural justice require that a party's submissions and evidence be duly considered before passing adverse orders. Court's Reasoning: The Petitioner contended that the Respondent authority ignored their detailed replies and passed the order without hearing them, noting absence at hearings. The Court noted that the Respondent provided multiple opportunities for hearing but the Petitioner and their representatives did not appear. Application of Law to Facts: The Court held that absence at hearings and failure to submit oral arguments cannot be construed as denial of natural justice where written submissions were considered. Conclusion: No violation of natural justice was found warranting interference at this stage. 6. Cross Empowerment and Jurisdictional Conflict under Section 6 of Gujarat GST Act Legal Framework: Section 6 governs the conditions under which officers appointed under Central GST Act may act under State GST Act and vice versa, including prohibition of simultaneous proceedings on the same matter. Court's Interpretation: The Court observed that the issues considered by the State Tax Authorities and the Respondent did not overlap fully, and thus no absolute bar on jurisdiction arose. Conclusion: The Court left this question to be decided by the appellate authority on merits. 7. Appropriate Remedy: Writ Jurisdiction vs. Statutory Appeal Legal Framework and Precedents: The Court relied on Supreme Court precedent holding that writ petitions under Article 226 are not maintainable where alternate statutory remedies exist unless exceptional circumstances such as breach of fundamental rights, violation of natural justice, excess of jurisdiction, or challenge to vires of statute are established. Court's Reasoning: None of the exceptional circumstances were established by the Petitioner. The Court emphasized that disputed questions of fact and merits of assessment orders are to be decided by the appellate authority under Section 107 of the CGST Act. Conclusion: The Court dismissed the writ petition but granted liberty to the Petitioner to challenge the impugned order before the appellate authority. Significant Holdings "The existence of an alternate remedy is not an absolute bar to the maintainability of a writ petition under Article 226 of the Constitution. But a writ petition can be entertained in exceptional circumstances where there is: (i) a breach of fundamental rights; (ii) a violation of the principles of natural justice; (iii) an excess of jurisdiction; or (iv) a challenge to the vires of the statute or delegated legislation." "In the present case, none of the above exceptions was established. There was, in fact, no violation of the principles of natural justice since a notice was served on the person in charge of the conveyance. In this backdrop, it was not appropriate for the High Court to entertain a writ petition. The assessment of facts would have to be carried out by the appellate authority." "So far as the aspect of invocation of jurisdiction of the extended period is concerned, it is again the disputed question because the impugned order is dated 04.12.2024, whereas, the same is uploaded on 13.08.2024 and therefore, whether the said order can be said which is signed on 04.08.2024 is to be considered within the period of limitation as alleged by the Petitioner or not is also matter of examining the record." Core principles established include:
Final determinations:
|
