M/S. Sales Emporium vs. The Supdt. Of Central Tax Range V Khardah Division Kolkata North Commissionerate And Ors

Held

The Court allowed the appellant to raise additional grounds in the writ petition, as the question of law regarding the second respondent proceeding dehors the initial proceedings under Section 61 and the appellant's reply was significant. The Court found that the condition of depositing 10% of the disputed tax (Rs. 25 crore) would be onerous on the appellant, given the question of law involved. Therefore, the Court modified the Single Bench's order. Instead of the cash deposit, the appellant was directed to furnish a bank guarantee for Rs. 5 crore within three weeks, without prejudice to its rights and contentions. The demand raised in the adjudication order was stayed, subject to compliance with the bank guarantee condition. If the appellant failed to comply, the stay would not enure, and the appeal would stand dismissed. The Court expressly left undecided the maintainability of the writ petition.

Facts

The appellant, M/s. Sales Emporium, filed an intra-Court appeal against an order dated September 11, 2024, by a learned Single Bench. The Single Bench had agreed to hear the writ petition challenging an adjudication order, keeping the maintainability of the writ petition open, but directed the appellant to deposit 10% of the disputed tax, approximately Rs. 25 crore. The appellant sought to raise additional grounds in their appeal, arguing that scrutiny of returns for 2018-2019 was conducted on January 20, 2023, by the first respondent. A notice for discrepancies was issued, to which the appellant replied in Form GST ASMT-11, explaining that a typographical error in GSTR-1 was rectified in GSTR-9 and reconciled in GSTR-9C, with the short-paid tax already paid. The second respondent later issued a second show cause notice on January 30, 2024, without mentioning the prior proceedings.

Key Issues

1. Whether the second respondent can proceed with a second show cause notice (dated January 30, 2024) dehors the proceedings initiated by the first respondent under Section 61 of the CGST Act, 2017, and the appellant's reply in Form GST ASMT-11, without the first respondent choosing to proceed further after receiving the reply? Petitioner's arguments: The appellant contended that the scrutiny of returns for 2018-2019 was done in January 2023, and a notice for discrepancies was issued. They submitted a reply in Form GST ASMT-11, explaining that an inadvertent typographical/clerical error in GSTR-1 was rectified in GSTR-9 and duly reconciled at the time of filing GSTR-9C, with the unreconciled figure and short-paid tax already paid. They argued that the second show cause notice issued by the second respondent on January 30, 2024, was issued without reference to the earlier proceedings under Section 61 and the subsequent reply, raising a question of law regarding the validity of proceeding further without addressing the initial scrutiny and reply. Revenue's arguments: Not recorded in the judgment.