Natural Wood And Veneers PVT. LTD. vs. Union Of INDIA

Facts

The petitioner, Natural Wood and Veneers Pvt. Ltd., filed a writ petition challenging a show cause notice dated November 28, 2019, issued by the Assistant Commissioner of Central Tax (2nd respondent). The petitioner contended that the notice was issued without authority of law, as the proceedings were initiated after the repeal of Chapter V of the Finance Act, 1994, effective from July 1, 2017. They also argued that the notifications relied upon in the show cause notice were not applicable or valid because the parent statute under which they were issued was no longer in force. The respondents, including the Union of India and Assistant Commissioners, filed a statement. Both parties referred to Sections 173 and 174 of the CGST Act, 2017, concerning the repeal and saving provisions.

Held

The Court observed that the impugned notice (Ext.P4) was a show cause notice, and the petitioner had not yet responded to it. The Court acknowledged the petitioner's contention that the notice might be without authority of law and that the relied-upon notifications might not be in force. However, the Court held that it had the jurisdiction to entertain the challenge under Article 226 of the Constitution. The Court directed the petitioner to submit detailed written objections, including preliminary objections on maintainability and lack of jurisdiction, and also to address the merits of the matter. The 2nd respondent was directed to consider these contentions, particularly the issue of jurisdiction, as the first step before proceeding to the merits. The petitioner was given ten days from the receipt of the judgment to submit their objections. The 2nd respondent was to afford a reasonable opportunity of being heard and take a considered decision on the jurisdictional issue before dealing with the merits.

Key Issues

1. Whether the show cause notice dated November 28, 2019, issued by the 2nd respondent is without authority of law, considering that the proceedings were initiated after the repeal of Chapter V of the Finance Act, 1994, and whether the notifications relied upon are valid and applicable? Petitioner's contentions: The petitioner argued that the show cause notice was issued without proper authority because the proceedings were initiated after the repeal of Chapter V of the Finance Act, 1994, which ceased to be in force from July 1, 2017. They further asserted that the notifications cited in the notice were not applicable and invalid as the parent statute under which they were issued was repealed. The petitioner invoked the discretionary jurisdiction under Article 226 of the Constitution of India to challenge the notice at this stage. Respondents' contentions: The respondents, through their counsel, referred to Sections 173 and 174 of the CGST Act, 2017, which deal with the repeal and saving provisions. No specific argument was recorded for the respondents regarding the validity of the show cause notice itself, beyond referencing these statutory provisions.