M/S Shri Sharma Steeltech INDIA PVT. LTD. vs. State Of Rajasthan

Held

The Court held that a plain reading of Rule 142(1A) and 142(2A) of the Rules of 2017 indicates that it is discretionary for the proper officer to issue a communication. While a communication was issued in this case, and the petitioner filed submissions, there is no provision within the Rules for adjudicating these submissions against a proposed liability at this stage. The Court disagreed with the petitioner's reliance on the Calcutta High Court judgments, reasoning that the Rules do not provide for an opportunity of hearing or for deciding submissions made against a proposed liability at the stage of Rule 142(1A) and 142(2A). The Court emphasized that the right of the assessee to an opportunity of hearing arises only after the issuance of a show cause notice under Rule 142(1)(a). The Court cited the principle from Ajmera Housing Corporation & Ors. Vs. Commissioner of Income Tax that taxing statutes must be interpreted strictly based on their wording. Since only a communication had been issued and no show cause notice, the Court found no reason to entertain the writ petition, viewing it as an attempt to stall proceedings. The petition was dismissed.

Facts

M/s Shri Sharma Steeltech India Pvt. Ltd. (the petitioner) filed a writ petition before the Rajasthan High Court at Jaipur. The petitioner was aggrieved by the non-consideration of its reply submitted pursuant to a notice issued under GST DRC-01A. The petitioner contended that Rule 142(1A) and 142(2A) of the Rajasthan Goods & Service Tax (RGST)/Central Goods & Service Tax (CGST) Rules, 2017, require authorities to consider the reply before issuing a show cause notice under Rule 142(1)(a). The petitioner also argued that there is no provision for affording an opportunity of hearing at this stage and relied on Calcutta High Court judgments. The respondents, including the State of Rajasthan and the Union of India, argued that Rule 142(1A) is discretionary and that there is no provision for a hearing at the pre-show cause notice stage. They relied on Supreme Court judgments emphasizing that writ petitions should not be entertained against mere show cause notices.

Key Issues

1. Whether the authorities are required to consider the reply submitted by the petitioner in response to a notice under Rule 142(1A) of the RGST/CGST Rules, 2017, before issuing a show cause notice under Rule 142(1)(a)? (Question of law, concerning Rule 142(1A) and 142(1)(a) of the Rules of 2017). Petitioner's Contention: The petitioner argued that Rule 142(1A) and 142(2A) mandate consideration of the reply before issuing a show cause notice. They relied on Calcutta High Court judgments in Eden Real Estate Pvt. Ltd. & Anr. Vs. The Senior Joint Commissioner of Revenue Kolkata South Circle, WBGST & Ors. and Diamond Beverages Private Limited & Anr. Vs. The Assistant Commissioner of CGST & CX, Taltala Division II Kolkata South Commissioner & Ors., which held that an opportunity of hearing is required even at the pre-show cause intimation stage. Revenue's Contention: The respondents contended that Rule 142(1A) is discretionary ('proper officer may') and that Rule 142(2A) only allows for submissions. They argued that there is no provision for affording an opportunity of hearing or deciding submissions at this stage, unlike after a show cause notice is issued under Rule 142(1)(a). They relied on the Supreme Court judgment in Commissioner of Central Excise, Haldia Vs. Krishna Wax Private Limited, stating that writ petitions are generally not entertained against mere show cause notices.