M/S Sri Sai Industries vs. The State Of Bihar

Held

The Court did not decide the issues on merits. Instead, it noted that the petitioner had an equally efficacious remedy under the CGST Act. The Court disposed of the writ petition by directing that a copy of the order passed by the authorities, which led to the demand order, be supplied to the petitioner's counsel by the next day. The Court further directed that upon the petitioner availing the legal remedy, the adjudicatory authority should decide the matter expeditiously, preferably within three months. Both parties undertook to cooperate and not seek unnecessary adjournments. All issues on merits were expressly left open.

Facts

The petitioner, M/s Sri Sai Industries, through its Proprietor Laxmi Prasad, filed a writ petition before the Patna High Court challenging a Demand Order (Summary of Order) dated June 29, 2020, issued by the Joint Commissioner of State Tax, Aurangabad (Respondent No. 3). The petitioner also sought to quash the assessment order and a notice dated November 9, 2019. The petitioner contended that the notice dated November 9, 2019, did not comply with Section 74 of the CGST Act, thereby denying them a reasonable opportunity to show cause. The State, represented by the Advocate General, stated that prior proceedings led to the issuance of the impugned demand notice. The Court noted that the petitioner had an equally efficacious remedy under the CGST Act.

Key Issues

1. Whether the notice dated November 9, 2019, issued under Section 74 of the CGST Act, complied with the requirements of the said section, particularly regarding providing a reasonable opportunity to the petitioner to show cause against the proposed demand? (Mixed question of law and fact, turning on Section 74 of the CGST Act). 2. Whether a general show cause notice can be deemed to be issued under Section 74(1) of the CGST Act? (Question of law, turning on Section 74(1) of the CGST Act). 3. Whether a notice issued under Section 74 of the CGST Act must necessarily mention that it has been issued under the said section and specify the amount of tax, interest, and penalty proposed? (Question of law, turning on Section 74 of the CGST Act). Petitioner's Contentions: The petitioner argued that the notice dated November 9, 2019, failed to comply with Section 74 of the CGST Act, thus violating principles of natural justice by not affording a reasonable opportunity to show cause. They contended that a general show cause notice cannot be considered a notice under Section 74(1) and that any notice under Section 74 must explicitly state it is issued under that section and detail the proposed tax, interest, and penalty amounts. They also argued that proceedings for suppression of turnover cannot be initiated before the filing of annual returns. Revenue's Contentions: The State submitted that prior proceedings led to the issuance of the impugned demand notice.