M/S. Glaxosmithkline Consumer Health Care Limited vs. The Deputy Commissioner (State Tax)
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The petitioner, M/s. Glaxosmithkline Consumer Health Care Limited, filed a writ petition challenging a Show Cause Notice (SCN) dated 24.12.2023, issued under Section 73 of the CGST Act. This SCN pertains to the tax period April 2018 to March 2019 and proposes a demand of Rs. 1,91,68,79,244/- along with interest and penalty. The petitioner had previously filed a writ petition (W.P.No.34139 of 2023) challenging an earlier SCN dated 29.09.2023 for the period July 2017 to March 2018. That earlier petition was allowed by the same bench on 19.12.2023 due to the SCN being bereft of necessary details and information. The petitioner argues that the current SCN is identical in content to the previous one, differing only in the financial year, tax rate, and turnover amount, and that the respondent authorities have failed to consider the previous judgment.
Held
The Court allowed the writ petition, setting aside the impugned Show Cause Notice dated 24.12.2023. The Court found that the current SCN was verbatim the same as the previous SCN dated 29.09.2023, which had been quashed by this very bench on 19.12.2023 in W.P.No.34139 of 2023. The reasoning was that the previous SCN was found to be bereft of necessary information, source, and materials, issued mechanically without application of mind, and lacking cogent supporting materials. The Court noted that despite the previous order, a fresh SCN for a subsequent period was issued with identical deficiencies, suggesting a failure by the respondent authorities to consider the prior judgment. The Court reiterated its previous finding that such notices are unsustainable as they lack facts and materials. The right of the Department to initiate proceedings in accordance with law was reserved, as was done in the previous order. The operative direction was to set aside/quash the impugned SCN.
Key Issues
1. Whether the Show Cause Notice dated 24.12.2023, issued under Section 73 of the CGST Act, is sustainable in law, given its alleged lack of necessary details and materials. Petitioner's Arguments: The petitioner contends that the current SCN is identical in its deficiency of details to the previous SCN dated 29.09.2023, which was quashed by this Court on 19.12.2023. They argue that the current SCN, like the previous one, is mechanically issued without application of mind and lacks cogent supporting materials, making it unsustainable. The petitioner asserts that they had provided all necessary information regarding product manufacturing, applicable tax rates, and supply details, yet the respondents issued a vague notice without further investigation. They rely on the previous judgment of this Court in W.P.No.34139 of 2023. Respondents' Arguments: The judgment records that Mr. K. Bhaskar Reddy, Assistant Government Pleader for Commercial Taxes, appeared for the respondents. However, no specific arguments made by the respondents are detailed in the provided text.
Sections Cited
Section 73
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Cause title — parties, addresses and appearances
The Court made the following: ORDER
THE HON'BLE SRI JUSTICE P.SAM KOSITY AND THE HON'BLE SRI JUSTICE N.TUKARAMJI W.P.No.1827 of 2024 OtrlDER, [-re. Ho tl'ble Si Justrce P.9AM KosHY) Heard Mr. Laxmi Kumaran Sridharan, learned counsel for the petitioner and Mr. K. Bhaskar Reddy, learned Assistant Government Pleader for Commercia-l Taxes appearing for the respondents. Perused the entire record.
The present is a repeated writ petition on behalf of the petitioner in respect of the identical set of facts.
The challenge in the present writ petition is to the Show Cause Notice dated 24.12.2023 issued under Section 73 of the Central Goods ald Services Tax Act, 2017, for the tax period April, 20 18 to March, 2Ol9 to the extent of confirming demand of Rs.1,91,68,79,2441- along with interest and penalry. The petitioner herein was also earlier issued with a Show Cause Notice on 29.O9.2023 for the tax period J:uly,2Ol7 to March, 2018. 4. A bare perusal of the two show cause notices would reflect that except for the change of the financial year, rate of tax and the amount in the turnover of the petitioner, the contents of the show cause notice is verbatim same. The earlier shou' cause notice dated 2g.Og.2O23 issued to the petitioner on account of the sarne being
2 bereft of details and necessar5z information, was subjected to challenge before this Court in W.p.No.34139 of 2023, whereby the same stood allow,ed by this very Bench on 19. 12.2023. White allowing the said writ petition, this Court had in very categorical terms in paragraph Nos.6 to g has held as under:
"
It rvould be necessary 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 Shiry Cause Notice itsel[ r.voutd give a clear indication ihrt th. Show Cause Notice lacks necessary information, source and the matenals on the basis of which the authority concerned found the necessity for issuance of the Show Cause Notice. The Shorv Cause Notice, from the plain reading, seems to be one which has been issued in a mechanical manner without application of mind and without an,. cogent sufficrent materials available or even the basic scrutiny or the investigation which were required for the authority concerned in reaching to the conclusion that certain transactionl*.hich hao_e been carried on by the respondents appear to have been the transactlons 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 sufhcient force in the submissions made by the learned counsel for the petitioner when they say that since the proceeding has been initiated under Section Zi of ine act, ttre very provision of Section 73 ol the Act starts with the words where it appears to be for the authority concerned which by it".ii ^...,. that at the time ivhere the authority appears to fou.,i it.,..""son. for initiating rhe proceedings, there ought to naa U..., IIl.r. material, information or even sort of a complaint available with them as regards the suspicious transacti,ons or the alleged evasion of tax made by the petitioner. 8 For the foregoing reasons, we are of the considered opinion that Ex.PI - Show Cause Notice, dated 2g.Og.2O23 u,ould not be sustainable as they are bereft of facts and materials and the same deserves to be and is accordingly set aside/quashed. Nonetheless, lf the lalv permits, the right of the Department stands reserved for initiation of proceedings in accordance with law-.
Surprisingly, in spite of the earlier show cause notice dated 29.09.2023, being struck down by this Court by the aforesaid order
3 as early as on 19.1.2.2023 u'hrch was a by-party order passed in the presence of the iearned counsel for the Department as well, the respondent authorities have now passed a fresh show cause notice for the subsequent year, where, prima facie, it appears that the authorities concerned have not considered the judgment rendered by this Court on 19.12.2023 on identical set of facts in respect of the very same assessee. This appears to be somewhat strange on the part of the respondent authorities. What is also surprising to be taken note is the fact that the petitioner herein had already provided all necessary information available with them in respect of the manufacture of various products, different rate of taxes applicable on each of the products and also the details of the supply made by the petitioner to their suppliers. In spite of thiS information being vvithin the knowledge of the respondent authorities, yet without any further preliminary investigation, enquiry or scrutiny being done at their level, the respondents have issued yet another vague notice bereft of details.
As earlier stated, the contents of the impugned show cause notice is verbatim salne as was passed for the previous assessment year. We are deliberately refraining ourselves from making any further observation against the officers of the respondents for the reason that it is only at the show cause stage. Nonetheless, we are inclined to a1lou. the u,rit petition on the same terms in which the I
---- 4 was passed and clecided on respondent authorities. if earlier writ petition of the petitioner ulde W.P.No.34739 of 2023 19.12.2023 reserving the right of the permissible under law to take approprrate recourse in accordance with law Accordingly, the tmpugned Show Cause Notice dated 29.12.2023 is iiable to be and is accordingly set aside/quashed with the aforesaid libertv to the Department The Writ Petition to the aforesaid extent stands allowed on similar terms Consequently, miscellaneous petitions pending, if any, shall stand closed. No order as to costs To, essrsrseflrlAli[aEE //// v SECTION OFFICER II:"?:8::l ?3T,+':::" " "' (S tate ra x)' tVIa I kajs i ri s rU-2, Ma I kajs i ri, II:.?;[TtABnei or State raxes Department, c r comptex, Nampaly. The Principal Secretarv to ths e6yslnrnent, (Revenue Department), State of Telan_gana, Telangana'secretariat, HvOera6)O'_SO"Oiiz:z one cc to sRt LAksHtu, KUMAFiAN'iHib"fiXiXil:;fo"ocate [opUCl Two ccs to Gp FoR coMM.ERCtAL'r;iES:'ii'sh'S;d ror the state or Telan-gana at Hyderabad. IOUii-" I rrvr' \'w' Two CD Copies 1 2 3
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( HIGH COURT DATED:2510112024 ORDER ,}, I 2 7 i:LB ,li'li WP.No.1827 ot 2024 ALLOWING THE WRIT PETTTION WITHOUT COSTS t l I ln
Reproduced from the public record of the Telangana High Court. Verify against the court's own copy before relying on it. Income tax judgments are on bharattax.net.