TMI Blog2023 (11) TMI 1057X X X X Extracts X X X X X X X X Extracts X X X X ..... itioner has been afforded opportunity to file objections and also to file evidence - there are no reason at this stage of the issuance of show cause notice, particularly, when there is no challenge to the jurisdiction of the authority issuing the show cause notice, as also in the absence of any argument challenging the notice on such grounds, on which the judicial review may be open against the show cause notice, to entertain the writ petition. In SPECIAL DIRECTOR VERSUS MOHD. GHULAM GHOUSE [ 2004 (1) TMI 378 - SUPREME COURT] the Hon ble Apex Court deprecated the practice of High Courts entertaining writ petitions questioning the legality of show cause notices stalling enquiries as proposed and retarding investigative process. The Hon ble Apex Court held that unless the High Court is satisfied that the show cause notice was totally non est in the eye of the law for absolute want of jurisdiction of the authority to even investigate into facts, the writ petitions should not be entertained for the mere asking and as a matter of routine, and the writ petitioner should invariably be directed to respond to the show cause notice and take all stands highlighted in the writ petition. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ate Taxes, Dabagardens Circle, Visakhapatnam-1 Division, Andhra Pradesh, as illegal, arbitrary and in contravention of the Central Goods and Services Tax (CGST) / Andhra Pradesh Goods and Services Tax (APGST) Act and Rules, and consequently to set aside the same. 3. The petitioner has prayed for a further declaration that the Input Tax Credit (ITC) claim cannot be denied on the basis of transfer done manually and not by filing Form GST-ITC 02 electronically under Section 18 (3) of CGST Act read with Rule 41 of the CGST Rules, as functionality to file Form GST-ITC 02 electronically was absent. 4. The petitioner/TIPL is a Company registered under the Companies Act, 1956 and is inter alia engaged in providing internet services across India from various States, including from the State of Andhra Pradesh. The 3rd respondent-the Deputy Assistant Commissioner, State Taxes issued show cause notice in From GST DRC-01, dated 29.09.2023 bearing DIN No.ZD370923020771D, impugned in the present petition. The said notice was issued, in view of the fact that the 3rd respondent concluded that the petitioner claimed ITC for Rs. 31,81,529/- in contravention of the provisions of Section 16 of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... otice) and calling for the explanation for such discrepancy. The petitioner submitted the reply/explanation dated 16/17.05.2023. On consideration of the petitioner s reply, the impugned show cause notice dated 29.09.2023 has been issued, granting opportunity to file objections along with documentary evidence, as also providing personal hearing, if so desired. 7. Sri S A V Saikumar, learned AGP for Commercial Taxes, raised preliminary objection that the writ petition challenging the show cause notice is premature and is not entertainable. The petitioner has the opportunity to submit the explanation, to lead the evidence before the 3rd respondent, as also to avail the opportunity of personal hearing and it is only after the petitioner avails such opportunity, and if then some adverse decision is taken, the petitioner can challenge the same in appropriate proceedings under statutory provisions. But bypassing such procedure and the remedy, writ petition filed directly to challenge the show cause notice would not be maintainable. He placed reliance in the judgment of the Hon ble Apex Court in the case of Assistant Commissioner of State Tax v. M/s. Commercial Steel Limited [2021 SCC ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... urt of Judicature for Rajasthan at Jodhpur) , allowed the said petition on 15.03.2022, and directed the respondents therein to regularize the input tax credit in favour of the petitioner therein, as per the entitlement. 11. Learned counsel for the petitioner also placed reliance in the case of this Court in K.V.Reddy Granites and Exports v. the State of Andhra Pradesh, the Additional Commissioner (State Tax) [2023 (8) TMI 1212 AP HC] to contend that in the said case, the appeal was filed manually and the same was rejected on the said ground that it was not filed electronically, but this Court allowed the writ petition and set aside the order of rejection, holding that even if the appeal was not filed electronically, but manually, the right of appeal being a valuable right, consideration of the appeal could not be denied on the principle that when substantial justice is pitted against technical considerations, it would be always necessary to prefer the ends of justice. He has further placed reliance on the judgment of the Andhra Pradesh High Court in Sri Siddhi Kalko Bhagavan Stone Crusher v. Asst. Commr. of S.T, Vizianagaram [2019 SCC OnLine AP 281] to the same effect, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... special Circumstances: (1) Subject to such conditions and restrictions as may be prescribed-- (a) a person who has applied for registration under this Act within thirty days from the date on which he becomes liable to registration and has been granted such registration shall be entitled to take credit of input tax in respect of inputs held in stock and inputs contained in semi-finished or finished goods held in stock on the day immediately preceding the date from which he becomes liable to pay tax under the provisions of this Act; (b) a person who takes registration under sub-section (3) of section 25 shall be entitled to take credit of input tax in respect of inputs held in stock and inputs contained in semi-finished or finished goods held in stock on the day immediately preceding the date of grant of registration; (c) where any registered person ceases to pay tax under section 10, he shall be entitled to take credit of input tax in respect of inputs held in stock, inputs contained in semi-finished or finished goods held in stock and on capital goods on the day immediately preceding the date from which he becomes liable to pay tax under section 9: Provided that the c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... shall pay an amount equal to the input tax credit taken on the said capital goods or plant and machinery reduced by such percentage points as may be prescribed7 or the tax on the transaction value of such capital goods or plant and machinery determined under section 15, whichever is higher: Provided that where refractory bricks, moulds and dies, jigs and fixtures are supplied as scrap, the taxable person may pay tax on the transaction value of such goods determined under section 15. 20. Rule 41 of the CGST Rules 2017 reads as under: Rule-41 Transfer of credit on sale, merger, amalgamation, lease or transfer of a business: (1) A registered person shall, in the event of sale, merger, de-merger, amalgamation, lease or transfer or change in the ownership of business for any reason, furnish the details of sale, merger, de-merger, amalgamation, lease or transfer of business, in FORM GST ITC-02, electronically on the common portal along with a request for transfer of unutilized input tax credit lying in his electronic credit ledger to the transferee: Provided that in the case of demerger, the input tax credit shall be apportioned in the ratio of the value of assets of the n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e absence of the electronically filing, would not allow the claim, is too early and appears to us a mere apprehension, inasmuch as the authority which has to pass the order after affording the opportunity of hearing based on evidence placed and on consideration of the objections, is expected to decide the same reasonably, in fairness and for the reasons recorded. If still the petitioner feels aggrieved, the Statute provides for the remedy and in the absence of statutory remedy or equally efficacious alternative remedy, the person aggrieved can also approach this Court under Article 226 of the Constitution of India. 22. We do not find any reason, at this stage of the issuance of show cause notice, particularly, when there is no challenge to the jurisdiction of the authority issuing the show cause notice, as also in the absence of any argument challenging the notice on such grounds, on which the judicial review may be open against the show cause notice, to entertain the writ petition. 23. In M/s. Commercial Steel Limited (supra), upon which learned AGP placed reliance, the Hon ble Apex Court, on the point of maintainability of the writ petition under Article 226 of the Constitu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... act the exceptions. 26. In Special Director v. Mohd. Ghulam Ghouse [(2004) 3 SCC 440] the Hon ble Apex Court deprecated the practice of High Courts entertaining writ petitions questioning the legality of show cause notices stalling enquiries as proposed and retarding investigative process. The Hon ble Apex Court held that unless the High Court is satisfied that the show cause notice was totally non est in the eye of the law for absolute want of jurisdiction of the authority to even investigate into facts, the writ petitions should not be entertained for the mere asking and as a matter of routine, and the writ petitioner should invariably be directed to respond to the show cause notice and take all stands highlighted in the writ petition. 27. It is apt to refer paragraph-5 of Mohd. Ghulam Ghouse (supra) as under: 5. This Court in a large number of cases has deprecated the practice of the High Courts entertaining writ petitions questioning legality of the show-cause notices stalling enquiries as proposed and retarding investigative process to find actual facts with the participation and in the presence of the parties. Unless the High Court is satisfied that the show-cau ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uwahati Carbon Ltd. [Union of India v. Guwahati Carbon Ltd., (2012) 11 SCC 651] , it was concluded; The Excise Law is a complete code in order to seek redress in excise matters and hence may not be appropriate for the writ court to entertain a petition under Article 226 of the Constitution , while in Malladi Drugs Pharma Ltd. v. Union of India [Malladi Drugs Pharma Ltd. v. Union of India, (2020) 12 SCC 808] , it was observed: The High Court, has, by the impugned judgment held that the appellant should first raise all the objections before the Authority who have issued the show-cause notice and in case any adverse order is passed against the appellant, then liberty has been granted to approach the High Court in our view, the High Court was absolutely right in dismissing the writ petition against a mere show-cause notice. 15. It is thus well settled that writ petition should normally not be entertained against mere issuance of show-cause notice. In the present case no show-cause notice was even issued when the High Court had initially entertained the petition and directed the Department to prima facie consider whether there was material to proceed with the matte ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Form GSTR-3B of the transferor and the transferee company and mere shortage of working capital cannot be an excuse to bypass the legal procedure laid down under the law. We are of the view that the stand of the Respondent No.2, for rejecting the claim of the petitioner in the wake of the admitted fact that the GST common portal was not online cannot be justified. We consequently set aside the order dated 17.04.2023 with liberty to the Respondent No.2 to pass fresh order taking into consideration the objections of the petitioner and also affording it opportunity of hearing, strictly in accordance with law. 34. From the aforesaid quoted paragraph, it is evident that the Allahabad High Court observed that it was incumbent upon the petitioner therein to raise proper objection and ought to have waited for the relevant Form to go live on the GST portal instead of making illegal adjustment by use of the Form GSTR-3B of the transferor and the transferee company and mere shortage of working capital could not be an excuse to bypass the legal procedure laid down under the law, which prima facie supports the contention as raised by the learned AGP for Commercial Taxes that in case of a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The judgments of this Court in K.V.Reddy Granites (supra) and Sri Siddhi Kalko Bhagavan Stone Crusher (supra) are on the point of filing of appeal under Section 107 of the APGST Act 2017 and Rule 108 of APGST Rules 2017. In those cases, the appeals were filed manually and not electronically. The appeal is a valuable right which cannot be taken away on the ground of technicalities. So far as utilization of the unutilized and transfer of ITC is concerned, the same is subject to acceptance. The same cannot be equated as right to appeal. The question as involved in the present case was not involved in those two cases. 39. The submission of the petitioner s counsel to read down the provisions of Rule 41 of the CGST Rules and to direct to accept the manual filing, at this stage, deserves rejection, as neither Rule 41 of the CGST Rules is under challenge nor is shown to be contrary to any provision of CGST Act, and particularly when the petitioner has the opportunity before the Authority pursuant to the show cause notice to justify manual filing. 40. For all the aforesaid reasons, we are of the considered view that the petitioner should approach the authority which has issued the sh ..... X X X X Extracts X X X X X X X X Extracts X X X X
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