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

Held

The Court held that Rule 142(1A) and 142(2A) of the RGST/CGST Rules, 2017, indicate that it is discretionary for the proper officer to issue a communication under Rule 142(1A). While a communication was issued in this case and the petitioner submitted a reply, the Rules do not provide for adjudication or decision on submissions made against a proposed liability at this stage. The Court differed from the petitioner's cited judgments, stating that the Rules do not provide for an opportunity of hearing at this preliminary stage, and the right to hearing arises only after a show cause notice under Rule 142(1)(a) is issued. The Court emphasized that taxing statutes must be interpreted strictly as promulgated, citing Ajmera Housing Corporation & Ors. Vs. Commissioner of Income Tax. Since only a communication was 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

The petitioner, M/s Shri Sharma Steeltech India Pvt. Ltd., filed a writ petition before the Rajasthan High Court, Jaipur Bench, challenging the non-consideration of its reply submitted in response to a notice issued under GST DRC-01A. The petitioner contended that Rule 142(1A) and 142(2A) of the RGST/CGST Rules, 2017, mandate consideration of replies before issuing a show cause notice under Rule 142(1)(a). The petitioner also argued, citing Calcutta High Court judgments, that an opportunity of hearing should be provided even at the pre-show cause intimation stage. The respondents, State of Rajasthan and Union of India, argued that Rule 142(1A) is discretionary, and there is no provision for affording an opportunity of hearing at this stage, with the right to hearing arising only after a show cause notice under Rule 142(1)(a) is issued.

Key Issues

1. Whether the authorities are required to consider the reply submitted by the petitioner in response to the intimation under Rule 142(1A) of the RGST/CGST Rules, 2017, before issuing a show cause notice under Rule 142(1)(a)? (Question of law and mixed fact and law, turning on Rule 142(1A) and 142(2A)). Petitioner's contention: Yes, Rule 142(1A) and 142(2A) necessitate consideration of the reply. Reliance was placed 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: No, Rule 142(1A) is discretionary ('proper officer may'), and there is no provision for affording an opportunity of hearing or deciding submissions made against the proposed liability at this stage. The right to hearing arises only after a show cause notice under Rule 142(1)(a) is issued. Reliance was placed on the Supreme Court judgment in Commissioner of Central Excise, Haldia Vs. Krishna Wax Private Limited, which stated that writ petitions should not normally be entertained against a mere show cause notice.