M/S Albatross Builders And Developers LLP vs. Assistant Commissioner Of Central Tax

Aggrieved by the show cause notice dated 22.07.2024, bearing F.No.GEXCOM/AE/INV/GST/6032/ 2022-AE-O/o COMMR-CGST-BENGALURU(S), issued by the respondent vide Annexure-A to the writ petition and the summary of show cause notice dated 03.08.2024, Reference No.ZD290824012414G, issued by the respondent vide Annexure-B to the writ petition under NC: 2024:KHC:46369 Section 74 of the Central Goods and Services Tax Act, 2017, the present writ petition is filed.

The petitioner is registered under the provisions of the Central Goods and Services Tax, 2017 and Karnataka Goods and Services Tax Act, 2017 and it is involved in the restaurant business. On the ground that the petitioner has availed erroneous Input Tax Credit for the period from January-2018 to August-2022, the aforementioned show cause notice and the summary of show cause notice have been issued. Aggrieved by the same, the present writ petition is filed.

The case of the petitioner is that the respondent could not have issued one single notice for the entire period between January-2018 and August-2022. They ought to have issued separate show cause notice for each financial year. It is further submitted, that in umpteen number of cases this court has held so. For the said reason, it is prayed that the show cause notice and the summary of show cause notice may be set aside. NC: 2024:KHC:46369

Per contra, the learned counsel for the respondent submits that though one show cause notice has been issued for the period from January-2018 to August-2022, the summary of show cause notice (vide Annexure-B to the writ petition) spells out the Input Tax erroneously claimed by the petitioner and the interest and penalty that is attracted. It is further contended that there is no express prohibition in law for issuing one show cause notice for several financial years. On the said ground, it is prayed that the writ petition be dismissed.

The question that arises for consideration is: Whether the respondent can issue one show cause notice for several financial years?

The Co-ordinate Bench of this Court, while examining the similar situation in W.P.No.15810/2024 (T-RES) in Paragraph No.4 has held as under:

This Court has reviewed the judgment of the Madras High Court and the scope of inquiry under NC: 2024:KHC:46369 Section 73 of the CGST Act. Based on the established legal principles and the precedent set by the Hon'ble Apex Court, this Court finds that the respondent erred in issuing a consolidated show cause notice for multiple assessment years, spanning from 2017-18 to 2020-21."

Such a decision is arrived at because the liability of the assessee for each financial year constitutes a different cause of action. The rate of tax, interest and the penalty may vary from one year to another year. Further, the notices issued for a particular financial year may be time- barred, while in respect of the others it may not.

Under the given facts and circumstances of the case, the impugned show cause notice (vide Annexure-A to the writ petition) has to be considered as one show cause notice for the entire period between January-2018 and August-2022. Perusal of Paragraph No.9 of the said show cause notice clarifies the same. It reads as under:

Now, therefore, M/s Albatross Builders and Developers LLP (GSTIN: 29ABJFA4828J1Z2) at #45, 100 ft road, 15th Cross, JP Nagar 4th Phase, NC: 2024:KHC:46369 Bangalore, 560078 are hereby required to show cause to the Deputy/Assistant Commissioner of Central Tax, South Division 6, BMTC Bus Stand, TTMC, Banashankari Stage II, Bengaluru-560070, the Adjudicating Authority, as to why: (a) Input Tax Credit (ITC) amounting to Rs.23,85,772/- [IGST 66615+ CGST 11,47,722 + SGST 11,47,722+ Cess 23,713] (twenty-three lakh eighty five thousand seven hundred seventy two only), availed in GSTR-3B Returns during the period Jan-18 to Aug-22 by them, should not be treated as ineligible ITC, as discussed supra; and demanded from them under Section 74(1) of the CGST Act, 2017 and relevant provisions under Karnataka GST Act, 2017; (b) Interest, as applicable, on the Input Tax Credit demanded as mentioned at (a), should not be demanded from them under the provisions of Section 50 of the CGST/Karnataka GST Act, 2017 read with Section 74(1) of the CGST Act, 2017; (c) Penalty as prescribed under Section 74(1) of the CGST/Karnataka GST Act, 2017 should not be imposed on them towards the demand proposed at (a) above;"