M/S. Gemini Coach Builders vs. Union Of INDIA

Facts

The petitioner, M/s.Gemini Coach Builders, filed a writ petition before the Madurai Bench of the Madras High Court seeking to quash a notice dated 29.03.2022 issued by the Additional Commissioner of GST and Central Excise. The petitioner contended that they had previously provided explanations regarding tax liabilities, referencing a circular clarifying GST on job work. They argued that the department had issued a notice under Section DRC-01A for a short payment of Rs.11,17,33,272/-, to which they had replied. The petitioner asserted that a subsequent notice was issued despite their explanation that GST on job work, as clarified by circular No.52/26/2018-GST, was 18% and had been paid. The respondents argued that the petitioner had received summons, given explanations, and was subsequently issued a DRC-01A notice. They further stated that the current show cause notice under Section 73 of the CGST Act, 2017, was issued, and the petitioner's objections would be heard before an order in original was passed. The respondents contended that the petitioner had approached the court prematurely.

Held

The Court held that the petitioner had not exhausted the statutory remedies available to them. The Court noted that the petitioner had received the show cause notice and, prior to that, had been issued summons and a DRC-01A notice intimating the ascertained tax payable. The Court found that the procedure contemplated under law involved the petitioner providing a reply to the show cause notice, followed by a personal hearing where they could make submissions with supporting documents, after which an order in original would be passed. Since this procedure had not been completed, the Court was not inclined to entertain the writ petition. The ratio decidendi is that a writ petition challenging a show cause notice under Section 73 of the CGST Act, 2017, is not maintainable if the petitioner has not availed the opportunity of filing a reply and participating in the personal hearing before the adjudicating authority. The operative direction was to dismiss the petition.

Key Issues

1. Whether the petitioner has exhausted the available statutory remedies before approaching this Court under Article 226 of the Constitution of India, concerning the show cause notice issued under Section 73 of the CGST Act, 2017? The petitioner argued that they had already provided detailed explanations regarding tax liabilities, referencing departmental circulars that clarified the applicable GST rate on job work. They contended that despite these explanations and prior notices, a new show cause notice was issued, and they had already paid the applicable GST as per the circular. The petitioner sought to quash this notice, implying a premature approach to the court was justified due to the perceived futility of further proceedings. The respondents argued that the petitioner had not exhausted the statutory remedies available. They pointed out that the petitioner had received prior notices and summons, provided explanations, and was now issued a show cause notice. The respondents contended that the petitioner's objections to this notice would be heard, and an order in original would be passed only thereafter, following the due procedure. Therefore, they argued that the writ petition was premature and should be dismissed.