M/S Ram Prasad Mishra vs. Union Of INDIA

Held

The Court noted that the challenge to the show cause notice stemmed from the interpretation placed upon Section 76 of the CGST Act, 2017, by the authorities. The petitioner's primary contention was that this interpretation was incorrect and would lead to an unconstitutional outcome by disregarding the benefit of input tax credit available under Sections 16, 41, and 49 of the CGST Act, 2017. The Court did not decide on the constitutional validity of Section 76(1)(2) or the correctness of the interpretation. Instead, it directed the petitioner to submit a reply to the show cause notice, emphasizing their entitlement to avail credit and appropriate set-off. The Authority was instructed to examine this contention and decide accordingly. The petitioner was granted liberty to challenge any adverse order that might be passed by the respondents. The petition was disposed of with these directions.

Facts

M/s Ram Prasad Mishra, the petitioner, has filed a writ petition challenging the constitutional validity of Section 76(1)(2) of the Central Goods and Services Tax Act, 2017. The challenge arose after the petitioner received a show cause notice on February 9, 2023. The notice proposed to demand and recover a Compensation Cess of Rs. 2,62,65,093/- collected but not paid by the petitioner. This demand was sought under Section 76 of the CGST Act, 2017, read with Section 11 of the Goods and Services Tax (Compensation) Act, 2017, and corresponding provisions of the SGST and IGST Acts, along with interest and penalty. The petitioner contends that the authorities have misinterpreted Section 76(1)(2) of the CGST Act, 2017.

Key Issues

1. Whether Section 76(1)(2) of the Central Goods and Services Tax Act, 2017, is constitutionally valid when interpreted by the respondent authorities to render a person liable to pay the entire amount of tax collected despite the availability of input tax credit under Sections 16, 41, and 49 of the CGST Act, 2017. Petitioner's Contention: The petitioner argues that the interpretation of Section 76(1)(2) by the respondent authorities is erroneous. They contend that the provision, as interpreted, would make the petitioner liable for the entire collected tax amount even if input tax credit is available under Sections 16, 41, and 49 of the CGST Act, 2017. This interpretation, according to the petitioner, renders the provision unconstitutional. Revenue/State's Contention: The judgment does not record any specific arguments made by the respondents regarding the interpretation of Section 76(1)(2) or its constitutional validity.