M/S North End Foods Marketing PVT.LTD. vs. State Of U.P. And 2 Others

Held

The Court noted that the petitioner had approached the High Court against a show cause notice. It was observed that all issues raised by the petitioner were still open to be agitated before the Assessing Officer. Therefore, the Court found no sufficient ground to entertain the writ petition. However, the Court disposed of the petition with the observation that all issues raised by the petitioner, particularly the jurisdiction of the Assessing Officer to proceed under Section 74 in light of the appellate authority's order dated July 19, 2022, should be raised before the Assessing Officer in reply to the show cause notice. The petitioner was granted liberty to add to their existing reply within two weeks. The Assessing Officer was directed to deal with all contentions in the reply and decide them strictly in accordance with law, with the issue of jurisdiction to be decided as a preliminary issue.

Facts

The petitioner, M/s North End Foods Marketing Pvt. Ltd., challenged a show cause notice dated May 25, 2021, issued by respondent no. 3 under Section 74 of the U.P. GST/CGST Act, 2017, for the financial year 2018-19. The petitioner argued that the authority lacked jurisdiction to proceed under Section 74 based on a survey conducted on September 13, 2019. Two prior proceedings stemming from this survey, one concerning blocking of Input Tax Credit (ITC) under Rule 86-A and another for confiscation of goods under Section 130, were decided in favor of the petitioner by the appellate authority. The petitioner contended that the appellate authority's orders, particularly the one dated July 19, 2022, which set aside the Section 130 order, covered all issues relevant to the Section 74 proceedings, rendering them futile.

Key Issues

1. Whether respondent no. 3 has the jurisdiction to initiate proceedings under Section 74 of the U.P. GST/CGST Act, 2017, for the financial year 2018-19, based on a survey conducted on September 13, 2019, when prior proceedings arising from the same survey concerning blocking of ITC under Rule 86-A and confiscation of goods under Section 130 have been decided in favor of the petitioner by the appellate authority under Section 107 of the Act. Petitioner's Arguments: The petitioner argued that the show cause notice under Section 74 is without jurisdiction because the appellate authority, in its order dated July 19, 2022, had already dealt with all aspects of the matter relating to the SIB survey dated September 13, 2019. They contended that the assessing officer under Section 74 cannot override the appellate authority's decision. The petitioner also stated that a reply to the show cause notice had already been filed, raising these issues. Revenue's Arguments: The respondent-department submitted that they were contemplating challenging the appellate authority's order dated July 19, 2022, before the High Court.