M/S Raigarh Iron Industries Limited vs. State Of Chhattisgarh

Held

The Court disposed of the writ petition by following the directions issued by the Patna High Court in the case of M/s Cohesive Infrastructure Developers Pvt. Ltd. The Court directed the petitioner to file an appeal before the GST Appellate Tribunal after depositing 20% of the demanded tax amount within 30 days of receiving a copy of the order. The Court held that the statutory stay provided under Section 112(9) of the CGST Act, 2017, would remain in operation until the appeal is decided. The Court further stipulated that once the President or State President of the GST Appellate Tribunal enters office, the appeal should be decided on its merits. If the petitioner fails to file the appeal within the prescribed period or fails to deposit the 20% demanded tax amount, the State would be at liberty to proceed with the recovery of the remaining taxes, interest, and penalty. The Court explicitly stated that this order would not provide any relief if the petitioner fails to comply with the deposit requirement.

Facts

The petitioner, M/s Raigarh Iron Industries Limited, filed a writ petition challenging an order passed by the Additional Commissioner (Appeal), State Tax, Chhattisgarh. This order, dated July 23, 2024, dismissed the petitioner's appeal and upheld a prior order dated March 13, 2023, and a show cause notice dated January 25, 2023. The impugned orders resulted in a tax liability of Rs. 76,72,744, with interest of Rs. 70,49,255 and penalty of Rs. 7,67,274. The petitioner argued that the show cause notice and subsequent proceedings were arbitrary and beyond jurisdiction, disregarding natural justice. The dispute stems from the disallowance of Input Tax Credit (ITC) claimed under the VAT Act for financial years 2014-15 and 2015-16, which was upheld by appellate authorities. A similar disallowance for 2016-17 and 2017-18 under the VAT Act is also under appeal. The GST demand notice specifically cited "TRAN-1 ITC claim but not carry forward VAT Regime" as the reason for the demand.

Key Issues

1. Whether the Appellate Authority (Respondent No. 2) exercised its jurisdiction properly under the law when dismissing the petitioner's appeal and upholding the show cause notice and demand order? 2. Whether the show cause notice dated January 25, 2023, and the consequent order dated March 13, 2023, were arbitrary, passed in excess of jurisdiction, and in disregard of the principles of natural justice? Petitioner's Arguments: The petitioner contended that the Appellate Authority failed to exercise its jurisdiction soundly. It argued that Respondent No. 3 (Deputy Commissioner) did not rely on relevant documents and disregarded ongoing litigation concerning the disallowance of ITC under the CG VAT. The petitioner further argued that the Appellate Authority upheld the "unlawful" show cause notice and demand notice solely on the basis that the petitioner had not produced a favorable order from the CG Commercial Tax Tribunal. Revenue's Arguments: The State argued that to file an appeal before the appellate tribunal, a deposit of 20% of the tax in dispute is required as per Section 112(8) of the CGST Act, 2017.