M/S Maruti Nandan Minetech PVT. LTD vs. Union Of INDIA

Held

The Court held that the first contention raised by the petitioners lacked merit. It observed that the opening paragraph of the FAQ answers dated May 14, 2019, explicitly clarified that these answers "do not have force of law, in other words, 'are not binding'". Similarly, the recording of minutes of a meeting held by the Council was considered a proposal and not a cause of action for challenging the proceedings. The Court also noted that the petitioners had not filed a reply to the impugned show-cause notice for four months. On the submission of the learned senior counsel for the petitioners, the Court agreed to keep the issue of the validity of the Notification dated January 25, 2018, open at this stage and granted liberty to the petitioners to file a reply to the show-cause notice within four weeks. The respondents were directed to proceed in accordance with law upon receipt of the reply. The petitioners were also granted liberty to avail further remedies if aggrieved by the respondents' decision.

Facts

The petitioners, M/s Maruti Nandan Minetech Pvt. Ltd and M/s Singhania Corporation Pvt. Ltd, filed writ petitions challenging a reply dated May 14, 2019, to a Frequently Asked Question (FAQ) concerning the Goods and Services Tax (GST) Council's agenda items 15 and 16 from its 32nd meeting on September 10, 2019. They also sought to read down Notification No. 4/2018-Central Tax (Rate) dated January 25, 2018, and quash a show-cause notice dated July 31, 2024. The petitioners' grievance was that the show-cause notice was issued based on the perceived binding effect of the FAQ answers and the Council's minutes, and that the issuing officer should not be the adjudicating officer. The revenue authorities are the respondents, including the Union of India and the State of Rajasthan.

Key Issues

1. Whether the reply dated 14.05.2019 to FAQ No. 7 and the minutes of the 32nd GST Council meeting dated 10.09.2019 have a binding legal effect on the revenue authorities, thereby forming a valid basis for issuing a show-cause notice under the GST regime? Petitioner's arguments: The petitioners contended that the show-cause notice was issued due to the purported binding effect of the FAQ answers and the Council's minutes. They argued that the issuing officer of the show-cause notice should not also act as the adjudicating officer. Revenue's arguments: The respondents did not explicitly record arguments on the binding nature of the FAQs or the minutes. However, the Court noted that the petitioners had not filed a reply to the show-cause notice for four months.