Judgment
IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT THE HONOURABLE MR. JUSTICE DINESH KUMAR SINGH FRIDAY, THE 13TH DAY OF OCTOBER 2023 / 21ST ASWINA, 1945 WP(C) NO. 32843 OF 2023 PETITIONERS:
1 M/S. GOLDEN TIMBER INDUSTRIES, XVII PERUMBAVOOR.P.O, PERUMBAVOOR.
ERNAKULAM, KERALA, REPRESENTED BY IT'S PROPRIETOR SHRI CHERAKKAKUDI ABDHULKHADAR RAFEEQUE, PIN – 683542 2 M/S SREE AYYAPPA TRADERS V/731, NEAR KANGHIRANGAD VAIDYANATHA TEMPLE, CHENAYANNUR-MAVICHERY ROAD, KANGHIRANGAD PO, CHENAYANNUR THALIPARAMBA, KANNUR, REPRESENTED BY IT'S PROPRIETOR SHRI. PRAMOTH MUPRATHADATHIL THANKAPPAN, PIN – 670142 3 M/S. ROYAL WOOD INDUSTRIES XIII/465-D, EANTHIKALA ARAYUR CHENKAI PO, NEYYATTINKARA, THIRUVANANTHAPURAM, REPRESENTED BY IT'S PROPRIETRESS SMT. SAFIYA ASHARAF, PIN – 695122 4 M/S HINDUSTHAN WOOD PRODUCTS TC 59/1610, BALARAMAPURAM ROAD, VENGANOOR PO, VIZHINJAM, THIRUVANANTHAPURAM, REPRESENTED BY IT'S PROPRIETRESS SMT. REHUMA KAROTHUKUDY URANPILLAI, PIN - 695523 BY ADVS.JOMTON F. PAYANKAN K.LATHA RESPONDENTS:
1 THE ADDITIONAL DIRECTOR DIRECTORATE GENERAL OF GST INTELLIGENCE,
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OFFICE OF THE PRINCIPAL ADDITIONAL DIRECTOR GENERAL, KOCHI ZONAL UNIT, CENTRAL EXCISE BHAVEN, KATHRIKADAVU, KALOOR P.O, KOCHI, PIN – 682017 2 THE ADDITIONAL / JOINT COMMISSIONER O/O THE COMMISSIONER OF CENTRAL GOODS & SERVICE TAX CHENNAI SOUTH, 692, MHU COMPLEX, ANNA SALAI, NANDANAM, CHENNAI., PIN – 600035
3 THE DEPUTY COMMISSIONER/ ADDITIONAL COMMISSIONER-1 OFFICE OF THE COMMISSIONER OF STATE TAX, STATE GOOODS AND SERVICES TAX DEPARTMENT, KERALA TAX TOWERS, KILLIPPALAM, KARAMANA PO, THIRUVANANTHAPURAM., PIN – 695002 4 THE COMMISSIONER OF CENTRAL GOODS AND SERVICES TAX THIRUVANANTHAPURAM COMMISSIONARATE, PRESS CLUB ROAD, THIRUVANANTHAPURAM, PIN – 695001 5 CENTRAL ECONOMIC INTELLIGENCE BUREAU 6TH FLOOR, B-WING, JANPATH BHAVAN, NEW DELHI, PIN – 110001 6 ASSISTANT / DEPUTY COMMISSIONER OF CENTRAL GOODS AND SERVICES TAX KANNUR DIVISION, KUZHIKUNNU PO, KANNUR, PIN – 670001 7 ASSISTANT / DEPUTY COMMISSIONER OF CENTRAL GOODS AND SERVICES TAX THIRUVANANTHAPURAM SOUTH DIVISION, PRESS CLUB ROAD,
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THIRUVANANTHAPURAM, PIN – 695001 8 ASSISTANT / DEPUTY COMMISSIONER OF CENTRAL GOODS AND SERVICES TAX PERUMBAVOOR DIVISION, G ARCADE, THOTTUMKAL ROAD, NEAR KSRTC BUS STAND, PERUMBAVOOR, PIN – 686542 BY SRI. SREELAL N.WARRIER, STANDING COUNSEL THIS WRIT PETITION (CIVIL) HAVING COME UP FOR ADMISSION ON 13.10.2023, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:
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JUDGMENT This writ petition has been filed by the petitioners seeking the following reliefs:- “i) To issue a Writ of Certiorari or appropriate order to quash the Exhibit P3, P3A and P3B series of registration cancellation orders and Exhibit P4 letter dated 22-07-2023 issued by the third respondent to various Kerala State GST Authorities to block ITC to all the customers of the petitioners, which is a clear violation of fundamental right of doing business guaranteed under Article 19 (1) (g) of Constitution of India.
ii) To issue a Writ of Mandamus or Direction or order directing the respondents not to proceed further with the Exhibit P3 series of registration cancellation orders and Exhibit P4 letter dated 22-07-2023 issued by the third respondent to various Kerala State GST Authorities to block ITC to all the customers of the petitioners till the final decision taken by the second respondent adjudicating authority after giving a personal hearing based on Exhibit P2 series of reply.
iii) To issue a Writ of Mandamus or Direction to the respondent to consider the true fact that there is no discrepancy in the claim of the input tax raised by the petitioners for the Financial Year 2017-2018 and 2021- 2022. hence the first respondent is liable to withdraw the impugned Exhibit P3 series of registration cancellation orders and Exhibit P4 letter dated 22-07-2023 issued by the third respondent to various Kerala State GST Authorities to block ITC to all the customers of the petitioners.
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iv) To issue a Writ of Mandamus or specific direction to the second respondent adjudicating authority to grant a personal hearing to the petitioners while hearing the Exhibit P2 series of reply filed by them against the combined Exhibit P1 show cause notice and till the final decision based on it, stay may be granted against the Exhibit P3.
P3A and P3B series of registration cancellation orders and Exhibit P4 letter dated 22-07-2023 issued by the third respondent to various Kerala State GST Authorities to block ITC to all the customers of the petitioners v) To grant such other and further relief which this Hon'ble Court may deem fit and proper in the circumstances of the case and to allow this Writ petition.” 2.
A detailed investigation has been carried out by the Directorate General of GST Intelligence, in the matter of GST registration having obtained by the bogus entities for the sole purpose of issuing bogus invoices for the purpose of claiming input tax credit. The petitioners' names also figure in the investigation as they have obtained GST registration and issued GST invoices without making any supply of goods or services and availed input tax credit on the invoices issued in their names. A combined show cause notice dated 20.04.2023 in Ext.P1 was issued to the petitioners.
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3.
The learned counsel for the petitioners submitted that the petitioners have filed a detailed reply to the said show cause notice vide Ext.P2 series. However, till date, no decision has been taken on the said show cause notice and the petitioners' registration have been cancelled vide Ext.P3 series of orders. The learned counsel for the petitioners also submits that Ext.P4 communication has been addressed by the Additional Commissioner - I to the Joint Commissioners in various districts, for making recovery of the fraudulent ITC received by the petitioners and others.
4.
The learned counsel for the petitioners further submits that the petitioners are bona fide and genuine traders and they have not indulged in any falsification of ITC, for they are trading in invoices under registration. It is further submitted that without hearing the petitioners and finalising the adjudication of the show cause notice, the GST registration of the petitioners have been cancelled. It is therefore submitted that the second respondent, the adjudicating authority, be directed to adjudicate the show cause notice in Ext.P1, expeditiously, in a time bound manner, in accordance with law and petitioners may be given an opportunity to
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produce evidence, in support of their claim regard to genuineness of their GST registration and business activities.
5.
Sri. Sreelal N. Warrier, learned Standing Counsel, submits that a marathon investigation has been carried out in the whole country, including the State of Kerala regarding the registration of bogus firms on the GST regime for the sole purpose of claiming ITC. Those firms do not acquire registration and in fact, they do not exist in the given addresses. The petitioners' names have also brought in during the investigation by the Directorate General of GST Intelligence and the petitioners have been issued a show cause notice in Ext.P1, to which they have filed their reply in Ext.P2, which is to be adjudicated and decided in accordance with law.
6.
This Court is not going into the allegations as mentioned in Ext.P1 show cause notice. However, as the show cause notice has been issued and the petitioners have responded to the said show cause notice, the second respondent is directed to conclude the adjudication of Ext.P1 show cause notice issued to the petitioners expeditiously, in accordance with law and petitioners should be
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afforded opportunity for giving evidence in support of their claim.
The second respondent should make endeavour to finalise the adjudication proceedings of Ext. P1 show cause notice expeditiously, preferably, within a period of two months and communicate the orders to the petitioners.
With the aforesaid directions, the writ petition is finally disposed of.
Sd/- DINESH KUMAR SINGH
JUDGE DCS/16.10.2023
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APPENDIX PETITIONER EXHIBITS EXHIBIT P1 THE TRUE COPY OF THE COMBINED SHOW CAUSE NOTICE DATED 20-4-2023 IN OR NO.
108/2021-22 (GST) DATED 07-3-2023 ISSUED BY THE FIRST RESPONDENT TO THE PETITIONERS EXHIBIT P2 THE TRUE COPY OF REPLY FILED BY THE FIRST PETITIONER AGAINST THE EXHIBIT P1 COMBINED SHOW CAUSE NOTICE EXHIBIT P2 A THE TRUE COPY OF REPLY FILED BY THE SECOND PETITIONER AGAINST THE EXHIBIT P1 COMBINED SHOW CAUSE NOTICE EXHIBIT P2B TRUE COPY OF REPLY FILED BY THE THIRD PETITIONER AGAINST THE EXHIBIT P1 COMBINED SHOW CAUSE NOTICE EXHIBIT P2C THE TRUE COPY OF REPLY FILED BY THE FOURTH PETITIONER AGAINST THE EXHIBIT P1 COMBINED SHOW CAUSE NOTICE EXHIBIT P3 THE TRUE COPY OF THE ORDER FOR CANCELLATION OF REGISTRATION DATED 24-2- 2023 ISSUED BY THE SUPERINTEND , THALIPARAMBA TO THE SECOND PETITIONER EXHIBIT P3A THE TRUE COPY OF THE ORDER FOR CANCELLATION OF REGISTRATION DATED 1-3- 2023 ISSUED BY THE SUPERINTEND , NEYYATINKARA RANGE TO THE THIRD PETITIONER EXHIBIT P3B THE TRUE COPY OF THE ORDER FOR CANCELLATION OF REGISTRATION DATED 02-3- 2023 ISSUED BY THE STATE TAX OFFICER NEYYATINKARA TO THE FOURTH PETITIONER EXHIBIT P4 THE TRUE COPY OF THE LETTER DATED 22-07- 2023 ISSUED BY THE THIRD RESPONDENT TO VARIOUS KERALA STATE GST AUTHORITIES TO BLOCK ITC TO ALL THE CUSTOMERS OF THE PETITIONERS