Mis Ims Mercantiles LTD vs. Union Of INDIA & Anr.
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The Petitioner, MIS IMS MERCANTILES LTD, engaged in the wholesale and retail of batteries, is challenging an Order-in-Original (OIO) dated January 10, 2025, and a Show Cause Notice (SCN) dated August 3, 2024, both issued by the Commissioner, Central Tax (Delhi West). The SCN alleged tax evasion due to misdeclaration of duty slab (18% instead of 28%) and short payment of tax, following a search on March 8, 2021. The impugned OIO confirmed a demand of Rs. 50,51,96,165/- and imposed penalties. The Petitioner's grievance is that the differential tax was imposed on the entire turnover, despite the product in question constituting only 3% of its turnover, and that this submission was not considered.
Held
The Court noted that the Petitioner had filed a rectification application before Respondent No. 2, seeking to rectify the impugned OIO, which included supporting documents. While the application provided some figures, there was a lack of clarity regarding the Petitioner's other products and the GST paid on them. Considering that the rectification application was pending, the Court directed that the Petitioner be granted a personal hearing before the concerned official (Respondent No. 2). The Petitioner's submission that the disputed product constituted only 3% of its total turnover is to be taken into consideration during the decision on the rectification application, after due verification. The Petitioner is to be given notice of the personal hearing, and an order on the rectification application is to be passed within one month of the hearing. The Court did not decide the core issue of the correct GST rate or the validity of the demand on the entire turnover, as the matter was remitted for consideration of the rectification application.
Key Issues
1. Whether the Petitioner is liable to discharge GST at the rate of 18% or 28% on its products, specifically electronic chargers with rechargeable batteries, under the relevant provisions of the GST Act. The Petitioner contends that the impugned OIO erroneously imposed differential tax on its entire turnover, whereas the specific product in dispute constituted only 3% of its total turnover. The Petitioner argues that this submission was made in its reply but was not considered by the Respondent No. 2. The Revenue, represented by the Union of India and another, has not recorded arguments in the judgment regarding this specific issue, but their action of issuing the SCN and OIO implies a contention that the higher tax rate was applicable to the entire turnover or a significant portion thereof, and that the Petitioner had indeed misdeclared the duty slab. The Court also noted the lack of a clear breakup of the Petitioner's turnover for other products.
Sections Cited
Section 28 (rectification of mistakes)
AI-generated summary — verify with the full judgment below
Cause title — parties, addresses and appearances
O R D E R % 16.04.2025
This hearing has been done through hybrid mode.
The present writ petition has been filed by the Petitioner under Article 226 and 227 of the Constitution of India inter alia challenging the impugned Order-in-Original bearing reference number NO 108/CGST WEST/GST/SKG/ADC/2024-25 dated 10th January, 2025 (hereinafter ‘impugned OIO’) passed by Commissioner, Central Tax (Delhi West) and Show Cause Notice dated 3rd August, 2024 (hereinafter ‘impugned SCN’).
The brief facts of the case are that the Petitioner-firm engaged in the wholesale and retail business of Lithium Ion and other batteries. The GST Department upon gathering certain intelligence on tax evasion had conducted a search at the Petitioner premises on 8th March, 2021. Subsequently the impugned SCN was issued to the Petitioner alleging evasion of tax by way of mi eclaration of duty slab (18% instead of 28%) and short payment of tax.
Thereafter, the impugned OIO is stated to have been passed against the This is a digitally signed order. The authenticity of the order can be re-verified from Delhi High Court Order Portal by scanning the QR code shown above. The Order is downloaded from the DHC Server on 01/07/2025 at 19:26:56
Petitioner inter alia confirming the demand to the tune of Rs.50,51, 96,165 /- and imposing other penalties as well.
Therefore, the primary issue in this case is as to whether the Petitioner is bound to discharge GST at the rate of 18% or 28% in respect of its products i.e., electronic charger with rechargeable batteries. The grievance of the Petitioner is that the subject product constitutes only 3 % of its turnover but vide the impugned OIO, the differential tax has been imposed on the entire turnover of the Petitioner. It is also contended that the said submission was in fact made in the reply, which was not considered by Respondent No.2 while passing the impugned order.
The Court has queried the Petitioner’s Counsel as to where is the breakup of the turnover of the remaining products which unfortunately are not on record. However the ld. Counsel for the Petitioner informs the Court that a rectification application has been filed by the Petitioner before the Respondent No.2-Additional Commissioner, Central GST, Delhi West seeking rectification of the impugned order which includes certain documents to this effect.
The Court has perused the said application and the attached annexures placed on record. Even in the said application, certain figures are provided but there is no clarity as to what are the other products the Petitioner firm deals with and the actual GST being paid on them. Considering the fact that the rectification application is still pending before Respondent No.2, let the Petitioner be given a personal hearing before the concerned official so that the submissions can be heard on the same and an appropriate order in accordance with law can be passed.
The stand of the Petitioner that the said product constitutes only 3 % of This is a digitally signed order. The authenticity of the order can be re-verified from Delhi High Court Order Portal by scanning the QR code shown above. The Order is downloaded from the DHC Server on 01/07/2025 at 19:26:56
the total turnover shall be taken into consideration while passing an order on the rectification application, after the same is duly verified.
The Petitioner shall be given notice of personal hearing at the following contact details: e-mail : Bimaljain@922taxcorp.in Mob. : 9810609563, e-mail : service@922taxcorp.in Mob. : 9811566920
If the Petitioner wishes to file any documents, the Petitioner may do so and after the hearing is concluded, the order shall be passed within a period of one month.
Accordingly, the present writ petition is disposed of in above terms. All the pending applications are also disposed of. PRATHIBA M. SINGH, J RAJNEESH KUMAR GUPTA, J APRIL 16, 2025/MR/Ar. This is a digitally signed order. The authenticity of the order can be re-verified from Delhi High Court Order Portal by scanning the QR code shown above. The Order is downloaded from the DHC Server on 01/07/2025 at 19:26:56
Reproduced from the public record of the Delhi High Court. Verify against the court's own copy before relying on it. Income tax judgments are on bharattax.net.