M/S Hero Motocorp Limited vs. Union Of INDIA

Held

The Court held that the writ petition is not maintainable. The primary reasoning was that a show-cause notice cannot be made the subject matter of a writ petition. The Court acknowledged the petitioner's grievance regarding the proposed levy of GST at 28% instead of 18% and the potential financial impact, as well as the argument that other similarly situated manufacturers had not received such notices. However, the Court found no force in these contentions for invoking writ jurisdiction. The Court emphasized that the petitioner has a statutory right to file a reply to the show-cause notice and to be heard before any order is passed. Furthermore, any order passed by the authorities is appealable. The Court did not specifically address the procedural arguments regarding reference to the Board, GST Council, or advance rulings, as the primary basis for dismissal was the non-maintainability of the writ petition against a show-cause notice. The operative direction was that the petitioner is free to file a reply to the representations, and the respondents are required to act in accordance with the law while dealing with them.

Facts

M/s Hero Motocorp Limited (the petitioner) filed a writ petition challenging a show-cause notice dated August 3, 2024, issued by the Additional Commissioner (AE), CGST, Alwar. The notice proposed to levy GST at 28% on the petitioner, whereas the petitioner and similarly situated manufacturers have been paying GST at 18% since 2017. The petitioner argued that this increased levy would severely impact its business and that other manufacturers in a similar situation had not received such notices. The petitioner also contended that the show-cause notice was issued without referring the matter to the Board or the GST Council and without obtaining an advance ruling, contrary to circulars issued by the Central Board of Indirect Taxes and Customs (CBIC). The respondents argued that a show-cause notice cannot be challenged through a writ petition, as the petitioner has the right to file a reply and be heard, and any adverse order would be appealable under Sections 73, 74, and 75 of the CGST Act, 2017.

Key Issues

1. Whether the show-cause notice proposing to levy GST at 28% instead of the prevalent 18% is liable to be challenged by way of a writ petition, considering the petitioner's contention that similarly situated manufacturers have not received such notices and the potential for severe business impact. 2. Whether the issuance of the show-cause notice without referring the matter to the CBIC, the GST Council, or obtaining an advance ruling, as allegedly mandated by CBIC circulars, renders the notice legally invalid. Petitioner's Arguments: The petitioner contended that the differential treatment compared to similarly situated manufacturers, coupled with the substantial financial implications of the proposed 28% GST levy, warrants judicial intervention through a writ petition. They argued that the notice was procedurally flawed by not adhering to the requirement of referring changes in interpretation of prevalent trade practices to the Board and obtaining an advance ruling. Reliance was placed on CBIC circulars concerning such procedures. Respondents' Arguments: The respondents argued that a writ petition is not maintainable against a show-cause notice. They asserted that the petitioner has statutory remedies, including filing a reply and availing appellate mechanisms under Sections 73, 74, and 75 of the CGST Act. They relied on the Supreme Court judgment in Union of India & Ors. Vs. Coastal Container Transporters Association & Ors. and a Division Bench judgment of the same High Court in M/s. Global One Resources LLP Vs. Deputy Commissioner, SGST & Ors. to support the contention that show-cause notices are generally not subject to writ jurisdiction.