M/S Kalpataru Projects International Limited vs. The Deputy Commissioner (State Tax)

The challenge in the present Writ Petition is to the show cause notice bearing No.ZD36OI24O38992B, dated 3O.O1.2024, issued by respondent No.1 to the petitioner in respect of the alleged wrongful availment of the Input Tax Credit as well as Output Tax Liability.

Though the said show cause notice consists of a claim in respect of the discrepancy that has arisen in GSTR 2A when compared with the GSTR 38, it has been informed that for the same issue there is yet alother show cause notice issued on the same date i'e', on 30'Ol'2024'

Learned counsel for the petitioner at the outset submits that so far as the claim in respect of the discrepancy that has arisen out of GSTR 24. and GSTR 38 is concerned, the petitioner does not intend to challenge the show cause notice (Annexure p_ 1) to the aforesaid extent. The petitioner has already approached the concerned authority i.e., respondent No.1 and have provided them with all necessary explanations to the said show cause notice. However, learned counsel for the petitioner submits that the relief sought in the instant Writ Petition is confined so far as the allegation of wrongful avaiiment of Input Tax Credit as also Output Tax Liability and the claim made @ 20% is concerned.

Learned counsel for the petitioner relied upon the decision of this Court in W.p.No.34139 of 2023, in the case of M/s.Glaxosmithkline Consumer Health Care Limited Vs. The Deputg Commissioner Stalte ?cxr, decided on 19.12.2023. It is contended that the show cause notice that was challenged in the said Writ petition was of | 2023-VlL-9L9-TEL

Learned counsel for the Department on the other hand referred to the verifications and the findings in the impugned show cause notice where there is an alleged discrepancy which is referred in respect of GSTR 2A and GSTR 38 for the period 2Ol8-19 which has lead to issuance of the show cause notice and also highligtiting the show cause notice under challenge in the present Writ Petition being different than the show cause notice under challenge in the case of M/s-Glaxosmithkline Consttmer Health Care Limlted (suPra). 7 . It is in this regard that the contention of the learned counsel for the petitioner becomes relevant where he says that so far as the discrepancy in respect of GSTR 2A arfi GSTR 38 is concerned is not under challenge in the 6

On a query being made to the learned counsel for tJ'e Department to the aforesaid extent, he would fairly accept that so far as the claim of wrongful availment of ITC and Output Tax Liability is concerned, the impugned shou, cause notice herein and the show cause notice that was issued in M/s.Glaxosmithkline Consumer Health Care Limited's case (supra), are similar in nature.

In view of the same, it is necessary at this juncture to take note of the observations made by this Court while allowing the Writ Petition in M/s.Glaxosmithkline Consumer Health Care Limlted's case (supra), wherein this Court at paragraph Nos.6 to 8 made the following observations: o

It would be necessa4r at this juncture to take note of the contents of Ex.Pl - Show Cause Notice under challenge in the present writ petition itself. A plain reading of the Show Cause Notice itself would give a clear indication that the Show Cause Notice Iacks necessary information, source and the materials on the basis of which the authority concerned found the necessity for issuance of the Show Cause Notice. The Show Cause Notice, from the plain reading, seems to be one which has been issued in a mechanical manner without application of mind and without any cogent sufflcient materials available or even the basic scrutiny or the investigation which were required for the authority concerned in reaching to the conclusion that certain transactions which have been carried on by the respondents appear to have been the transactions where there is evasion of tax or where there is suppression of material facts or atleast there was reasonable suspicion on the transactions so made by the petitioner.

This Court also finds sufficient force in the submissions made by the learned counsel for the petitioner when they say that since the proceeding has been initiated under Section 73 of the Act, the very provision of Section 73 of the Act starts with the words where it appears to be for Uee authority concerned which by itself means that at the time where the authority appears to found it necessary for iniliating the proceedings, there ought to had been some material, information or even sort of a complaint available with them as regards the suspicious transactions or the alleged evasion of tax made by the petitioner.

For the foregoing reasons, we are of the considered opinion that Ex.Pl - Show Cause Notice, dated 29 -O9.2O23 would not be sustainable as they are bereft of facts and materials and the same deserves to be and is accordingly set aside/quashed' Nonetheless, if the law permits, the right of the Department stands reserved for initiation of proceedings in accordance with law.'

In the light of the aforesaid categorical findings in M/s.Gloxosmtthktine Consttmer Health Care Limited.,s ccse (supra), which has been subsequently followed in similar Writ Petitions i.e., W.P.No.l827 of 2024 in the case of M/ s.Glaxosmithkline Consumer Health Care Limted Vs. The Deputg Commisisoner State lax, which stood disposed of on 25.OI.2O24, and W.P.No.29673 of 2023 in the case of M/s.Mondelez India Foods Priuate Limited Vs. The Deputy Commissioner State Tax, which stood decided on 18.11.2023 and in the light of the consistent stand that this Court has taken on the finding that the show cause notice in the present Writ Petition so far as wrongful availment of ITC and Output Tax Liability is concerned similar if not identical, we are inclined to allow the Writ Petition on similar terms as has been passed in M/*Glaxosmithkline Consumer Health Care Limlted,s case (supra) and other similar Writ Petitions disposed of on similar terms.

Accordingly, the Writ Petition is allowed ald the impugned show cause notice, dated 30.01.2024, to tlrre C)

Ohe CC to Sri Lakshmi Kumaran Sridharan, Advocate [OPUC]

One CC to Sri Rajashekar Reddy, SPL SC FOR COMMERCIAL TAXES loPUCl

Two CD Copies SA KKS 6