M/S. Bajrang Prestressed Products (P) LTD., Through Its Director Ankit Kumar Pacheriwala vs. The Principal Commissioner, CGST And Cx, Ranchi

Held

The High Court held that all contentions raised by the petitioner, including those pertaining to the jurisdiction of the authority issuing the show cause notice, can be conveniently addressed before that authority. The Court found no reason to entertain the writ petition at the show cause notice stage. Therefore, the Court disposed of the writ petition by granting liberty to the petitioner to raise all the issues, including jurisdictional challenges and the applicability of Sections 71, 67, 74, and 73 of the CGST Act, before the competent authority in its reply to the show cause notice. The Court did not decide on the merits of the petitioner's claims regarding the validity of the inspection or the applicability of the specific sections.

Facts

M/s. Bajrang Prestressed Products (P) Ltd. (the petitioner) filed a writ petition before the Jharkhand High Court challenging an inspection conducted by the CGST Preventive Wing. The petitioner argued that the inspection, purportedly under Section 71 of the CGST Act, was conducted without proper authorization and by officers not competent to invoke the said section for preventive or enforcement actions. Furthermore, the petitioner contended that Section 67 of the CGST Act should have been invoked if stock verification or suppression was intended. The petitioner also challenged a show cause notice issued under Section 74 of the CGST Act, arguing it was issued without any element of fraud, wilful misstatement, or suppression, and that proceedings should have been initiated under Section 73 within the normal limitation period. The petition was filed at the show cause notice stage.

Key Issues

1. Whether an inspection conducted by the CGST Preventive Wing under Section 71 of the CGST Act, based on an alert circular from another CGST jurisdiction, is valid when Section 71 pertains to access for audit or assessment by the jurisdictional proper officer and not preventive action? (Question of law) 2. Whether officers of the CGST Preventive Wing are competent to invoke Section 71 of the CGST Act for inspections without authorization from the proper officer? (Question of law) 3. Whether the invocation of Section 74 of the CGST Act, for issuing a show cause notice, is justified in the absence of fraud, wilful misstatement, or suppression of facts, or if proceedings should have been initiated under Section 73 within the normal limitation period? (Question of mixed law and fact) Petitioner's Arguments: The petitioner argued that the inspection under Section 71 was without jurisdiction and authority of law, as it was conducted by the Preventive Wing for enforcement purposes, not by the jurisdictional proper officer for audit or assessment. They contended that Section 67 would have been the appropriate provision for stock verification. Furthermore, they argued that Section 74 was invoked colourably to circumvent the limitation period, and proceedings should have been under Section 73. They relied on the principle that actions must be within the statutory framework. Respondents' Arguments: The judgment does not record any specific arguments made by the respondents at this stage.