Judgment
IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT THE HONOURABLE MR. JUSTICE DINESH KUMAR SINGH MONDAY, THE 25TH DAY OF MARCH 2024 / 5TH CHAITHRA, 1946 WP(C) NO. 10637 OF 2024 PETITIONER :- TEENA JACOB,, AGED 36 YEARS PROPRIETRIX, M/S. CITY PAVING TILES, CC-1/367 F, KAPPATTIKAVU, EROOR, ERNAKULAM DISTRICT, PIN – 682306 BY ADVS.
K.J.ABRAHAM ARAVINDAKSHAN K.R.
NIKHIL JOHN RESPONDENTS :- 1 STATE TAX OFFICER, TAX PAYER SERVICE CIRCLE, PALARIVATTOM, STATE GOODS AND SERVICE TAX DEPARTMENT, 4TH FLOOR, TAX COMPLEX, PERUMANNOOR P.O, THEVARA, ERNAKULAM DISCTRICT, PIN – 682015 2 ASSISTANT COMMISSIONER, TAX PAYER SERVICE CIRCLE, PALARIVATTOM, STATE GOODS AND SERVICE TAX DEPARTMENT, ERNAKULAM NORTH DIVISION, TAX COMPLEX, PERUMANNOOR P.O, THEVARA, ERNAKULAM DISCTRICT, PIN - 682015 SMT. JASMIN M.M.-GP THIS WRIT PETITION (CIVIL) HAVING COME UP FOR ADMISSION ON 25.03.2024, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:
WP(C) NO. 10637 OF 2024 2 JUDGMENT Dated this the 25th day of March, 2024 1. The present writ petition is filed impugning Ext.P9 order dated 18.12.2023 passed by the Assistant Commissioner, Taxpayer Services Division, Ernakulam North, 2nd respondent in the writ petition.
2. The petitioner is the registered dealer under the provisions of CGST/KSGST Rules, 2017. The petitioner had opted for composition scheme during the tax period 2017-18.
3. As per Section 10(2)(a) of the CGST/SGST Act, 2017 : the registered person is eligible under the composition scheme provided he is not engaged in supply of service and he is not engaged in works contract.
4. The proper officer having found that the petitioner was engaged in works contract and therefore, he was not eligible for composition scheme issued show cause notice dated 29.09.2023 rejecting the application of the composition scheme as well as notice under Section 61(3) to determine the tax and other dues under Section 73(1). In the show cause notice, the petitioner was
WP(C) NO. 10637 OF 2024 3 granted time to respond but the petitioner did not respond to the notice. Accordingly, Ext.P7 notice for rejection of the compounding application dated 30.09.2023 in Ext.P7 has been issued.
5. The learned counsel for the petitioner submits that without determining the eligibility of the petitioner for compounding show cause notice for determining liability under Section 73 has been issued to the petitioner. It is submitted that at the first instance, the petitioner’s application for compounding should have been considered, and after passing an order rejecting the application, the notice for hearing the petitioner for determining the tax liability under Section 61(3) of the Act should have been issued. No such procedure has been followed in the present case.
6. Smt.Jasmin M.M, the learned Government Pleader does not dispute the fact that the show cause notice dated 29.09.2023 is prior to the date of notice for rejection of compounding application of the petitioner which is dated 30.09.2023. No order for rejecting the compounding application was issued before the show cause notice dated 29.09.2023 was issued to the petitioner.
7. Considering the said facts, I am of the view that there has been violation of the statutory scheme in the present case by the second respondent. He ought to have first determined the eligibility
WP(C) NO. 10637 OF 2024 4 of the petitioner for the compounding scheme and the order should have been passed for proceeding further in determining Tax liability under Section 73 of the Act.
8. Without there being an order rejecting the application of the petitioner, notice under Section 73 has been issued. This is a complete violation of the Scheme of the Act and therefore, I am of the considered opinion that the impugned order is unsustainable and it is hereby set aside. The matter is remitted back to the second respondent, first to determine the eligibility of the petitioner to the compounding scheme. The petitioner is directed to file reply to the show cause notice for rejection of the application under the composition scheme within a period of ten days from today. The show cause notice shall be adjudicated by the second respondent, after affording an opportunity of being heard to the petitioner. Only if the order is passed rejecting the compounding application of the petitioner, then notice under Section 73(1) should be issued to the petitioner.
The petitioner is directed to file any reply on or before 05.04.2024 and the petitioner shall appear on the same day before the second respondent to make his submission on compounding application. If the second respondent is not satisfied with the reply
WP(C) NO. 10637 OF 2024 5 of the petitioner, he shall issue fresh notice to the petitioner to determine tax liability and then pass fresh order in accordance with law.
This writ petition is disposed of.
Sd/-
DINESH KUMAR SINGH JUDGE SMA
WP(C) NO. 10637 OF 2024 6 APPENDIX OF WP(C) 10637/2024 PETITIONER EXHIBITS :- Exhibit P1 TRUE COPY OF THE GST PROFILE OF THE PETITIONER IN GST PORTAL Exhibit P2 TRUE COPY OF THE SCREEN SHORT TAKEN FROM THE GST PORTAL SHOWING THE STATUS OF APPLICATION IN FORM GST CMP-02 DATED 12.08.2017 VIDE ARN AA320817026022O Exhibit P3 TRUE COPY OF THE QUARTERLY RETURN IN FORM GSTR-4 DATED 23.12.2017 FOR THE PERIOD JULY TO SEPTEMBER 2017 Exhibit P4 TRUE COPY OF THE ANNUAL RETURN IN FORM GSTR- 9A DATED 07.02.2020 FOR THE PERIOD 01.01.2017 TO 31.03.2018 Exhibit P5 TRUE COPY OF THE INTERIM ORDER DATED 25.05.2022 IN WP(C)-16877 OF 2022 PASSED BY THIS HON'BLE COURT Exhibit P6 TRUE COPY OF THE SHOW CAUSE NOTICE DATED 29.09.2023 U/S.73(1) OF THE CGST/KSGST ACT 2017 ISSUED BY THE 1ST RESPONDENT FOR THE YEAR 2017-18 Exhibit P7 TRUE COPY OF THE NOTICE IN FORM GST CMP-05 DATED 30.09.2023 Exhibit P8 TRUE COPY OF SCREEN SHORT GENERATED FROM THE E-MAID ADDRESS OF THE PETITIONER DATED 30.09.2023 AT 04.56 PM Exhibit P9 TRUE COPY OF THE ASSESSMENT PROCEEDINGS IN ORDER
NO-32APKPT5992H1ZB/2017-18
DATED 18.12.2023 Exhibit P10 TRUE COPY OF THE JUDGMENT OF THE DIVISON BENCH OF THIS HON'BLE COURT IN WA.22 OF 2024 DATED 19.01.2024 REPORTED IN 2024(2) TMI 353