M/S Sainik Mining And Allied Services LTD Reprr Through Its Director Shri Narayan Singh Rathore vs. The Principal Commissioner Of CGST And Cx (Audit)

Held

The Court noted that the petitioner, after some arguments, sought permission to withdraw the writ petition to participate in the adjudication proceedings. The petitioner requested that the adjudicating authority be directed to consider their objections and reply on all grounds of law and fact with an independent application of mind, without prejudice from the Audit Monitoring Committee's report. The Court, having regard to the petitioner's submission, dismissed the writ petition as withdrawn. The Court clarified that the adjudicating authority would consider all available grounds of law and fact raised by the petitioner in their reply with an independent application of mind. The Court explicitly stated that it had not gone into the merits of the case.

Facts

The petitioner, M/s Sainik Mining and Allied Services Ltd., filed a writ petition challenging a show cause notice dated August 30, 2022, issued under Section 74(1) of the CGST Act, 2017. The petitioner contended that the Deputy Commissioner of CGST and Central Excise (Audit) acted on the dictates of the Audit Monitoring Committee, indicating an abdication of independent application of mind. This, the petitioner argued, would render any adjudication meaningless as the adjudicating officer's mind was predetermined. The revenue, represented by the CGST counsel, raised a preliminary objection, stating the writ petition was premature. They argued the show cause notice was based on an independent application of mind to materials concerning the alleged suppression of the applicable tax rate for 'support services to other mining n.e.c.' instead of 'goods transport services'.

Key Issues

1. Whether the show cause notice dated 30.08.2022, issued under Section 74(1) of the CGST Act, 2017, is vitiated by the alleged predetermined mind of the adjudicating authority due to acting on the dictates of the Audit Monitoring Committee? Petitioner's Contention: The petitioner argued that the Deputy Commissioner of CGST and Central Excise (Audit) had abdicated their independent application of mind by acting on the directives of the Audit Monitoring Committee. This predetermination of the adjudicating officer's mind would render the adjudication process legally meaningless. They relied on judgments in Siemens Ltd. Vrs. State of Maharashtra and Orient Paper Mills Ltd. Vrs. Union Of India to support their stance. Respondent's Contention: The respondent CGST argued that the writ petition was premature. They contended that the show cause notice was not merely a product of the Audit Monitoring Committee's report but was based on an independent application of mind to the materials found against the petitioner, specifically regarding the alleged misclassification of services and suppression of the applicable tax rate.