M/S Athani Sugars Limited vs. Union Of INDIA

Heard learned counsel Sri.Raghavendra B. Hanjer and Sri.H.R.Kambiyavar, for petitioner, learned counsel Sri.M.B.Kanavi, for respondent No.1, learned counsel Sri.Girish Hulamani, for respondent Nos.2 to 5 and Sri.P.N.Hatti, learned High Court Government Pleader for respondent No.6. 3. Learned counsel for the petitioner submits that the petitioner is aggrieved by the Show Cause Notice produced as per Annexure-A passed by respondent No.6 calling upon the NC: 2024:KHC-D:6369 petitioner to Show Cause as to why the GST could not be demanded on Extra Neutral Alcohol supplied by the petitioner. According to the petitioner the ENA being un-denatured spirit is not covered under the notification relied on by the respondents and respondents have no authority to issue such Show Cause Notices. Therefore, petitioner is before this Court.

Learned counsel submits that when the notifications relied on by respondents disclose that the ENA being denatured spirit is not covered under GST rate schedule, respondents cannot justify the Show Cause Notice produced as per Annexure-A. Therefore, petitioner is before this Court seeking the relief of writ in the nature of certiorari and any other writs to be granted under this circumstance.

Learned counsel for the petitioner placed reliance on the decision of the Hon’ble Apex Court in Bihar Distillery NC: 2024:KHC-D:6369 of the State Government and therefore, it is only the State Government which can have the say in the matter. Therefore, respondent Nos.4 and 5 were not having any authority to issue the Show Cause Notice. Accordingly, he prays for allowing the petition.

Per contra learned counsel for respondent Nos.2 and 5 opposing the petition submitted that the petitioner is challenging Annexure-A-Show Cause Notice issued by respondent No.4 dated 21.12.2023. As per Annexure-A respondent No.4 has referred to the notification issued by the Central Government and when petitioner was called upon to Show Cause as to why total GST Rs.91,71,56,925/- should not be demanded. The petitioner was called upon to submit his written explanation within a period of 30 days. The same was not complied by the petitioner and he has not submitted any written explanation. This Show Cause Notice was issued under Section 50 of Goods and Services Tax (for short, ‘the GST Act’). The document produced by the respondents discloses that respondent Nos.2 and 3 are having the authority under the notification issued by the Central Government to levy the tax and GST. Accordingly, the Show Cause Notice was issued. The NC: 2024:KHC-D:6369 petitioner was challenged the Show Cause Notice without filing 3 MANU/UP/2425/2021 NC: 2024:KHC-D:6369 and others4. Therefore, no reliance could be placed on the decision relied on by learned counsel for the petitioner.

Learned counsel submitted that the petitioner has chosen to submit his written explanation to the Show Cause Notice and there is no reason as to why he has not chosen to do so. Under such circumstances, this Court may not interfere at the stage of the Show Cause Notice to pass any order as it is the Competent Authority which will decide the issue, if any, raised by the petitioner. Accordingly, he prays for dismissal of the petition as not maintainable.

Learned High Court Government Pleader for respondent No.6 adopting the arguments addressed by learned counsel for respondent Nos.2 to 5 submits that since it is only the Show Cause Notice which was issued by respondent and since the petitioner has not chosen to file his written explanation to the said Show Cause Notice. The petition is liable to be dismissed as not maintainable.

Perused the material on record.

Petitioner is aggrieved by issuance of show- cause notice dated 21.12.2023 issued by respondent No.4 calling upon by the petitioner to show-cause as to why demand for GST at Rs.91,71,56,925/- should not be levied. The petitioner was called upon to submit his written explanation for not making demand along with the interest. It is also stated that petitioner can seek personal hearing while filing the written explanation. It is made clear that no such written explanation was submitted nor the opportunity to have the personal hearing is sought for by the petitioner. No reasonable explanation is given by the petitioner as to why he has not chosen to file written explanation, seeking personal hearing.

As rightly contended by the learned counsel for the respondents, it is only a show-cause notice issued by respondent No.4 calling upon the petitioner to submit his explanation. An option was also given to seek personal hearing. Even though, there is no explanation by the petitioner for the reasons best known to him, the NC: 2024:KHC-D:6369 petitioner has rushed to this court seeking to quash the show-cause notice on several grounds and such grounds could have been raised by the petitioner in his written explanation as to why said show-cause notice could not have been issued.

Even though learned counsel for the petitioner placed reliance on the decision in Bihar Distillery (supra), the dispute in the said case was in respect of cancellation of licence. On the other hand, learned counsel for the respondents placed reliance on the recent decision of the Hon’ble Apex Court Union of India (supra) where the Apex Court in para 19 held as under. “19. On the other hand, we find force in the contention of the learned senior counsel, Sri Radhakrishnan, appearing for the appellants that the High Court has committed error in entertaining the writ petition under Article 226 of Constitution of India at the stage of show cause notices. Though there is no bar as such for entertaining the writ petitions at the stage of show cause notice, but it is settled by number of decisions of this Court, where writ petitions can be entertained at the show cause notice stage. Neither it is a case of lack of juri iction nor any violation of principles of natural justice is alleged so as to entertain the NC: 2024:KHC-D:6369 writ petition at the stage of notice. High Court ought not to have entertained the writ petition, more so, when against the final orders appeal lies to this Court. The judgment of this Court in the case of Union of India & Anr. v. Guwahati Carbon Ltd. (supra) relied on by the learned senior counsel for the appellants also supports their case. In the aforesaid judgment, arising out of Central Excise Act, 1944, this Court has held that excise law is a complete code in order to seek redress in excise matters and held that entertaining writ petition is not proper where alternative remedy under statute is available. When there is a serious dispute with regard to classification of service, the respondents ought to have responded to the show cause notices by placing material in support of their stand but at the same time, there is no reason to approach the High Court questioning the very show cause notices. Further, as held by the High Court, it cannot be said that even from the contents of show cause notices there are no factual disputes. Further, the judgment of this Court in the case of Malladi Drugs & Pharma Ltd. v. Union of India, relied on by the learned senior counsel for the appellants also supports their case where this Court has upheld the judgment of the High Court which refused to interfere at show cause notice stage.”

Therefore, it is clear that the Apex Court frowned upon practice on approaching this court of issuance of show-cause notice, without giving written explanation to enable the authority to consider his defence NC: 2024:KHC-D:6369 and to pass appropriate orders. Therefore, I am of the opinion that the petitioner has rushed to this court to challenge the show-cause notice without availing the opportunity given to him to submit his written explanation. Therefore, the writ petition is not maintainable. Accordingly, I proceed to pass the following: ORDER