M/S Ukas Goods Carrier vs. Union Territory Of J And K And Ors. (Finance Department) Ch

Held

The Court held that the impugned demand order dated August 26, 2021, was not sustainable in law. While ordinarily, the petitioner would have been relegated to the statutory remedy of appeal under Section 107 of the GST Act, 2017, the Court chose not to do so because the impugned order confirmed a demand of Rs. 7,61,80,000/-, significantly exceeding the Rs. 4,59,50,000/- specified in the show cause notice. The Court emphasized that Section 74(1) requires the show cause notice to specify the amount of tax, interest, and penalty, providing the assessee an adequate opportunity to respond. Furthermore, Section 75(7) explicitly states that the amount demanded in the order shall not exceed the amount specified in the notice, nor shall the demand be confirmed on grounds other than those specified in the notice. This provision, the Court noted, ensures compliance with the principles of natural justice. Since the final order exceeded the amount specified in the show cause notice, it was deemed violative of Section 75(7) and the principles of natural justice. Consequently, the petition was allowed, and the impugned orders were set aside. The assessing authority was directed to reconsider the matter and pass a fresh order in accordance with the law, with the liberty to issue a fresh show cause notice for any excess amount, provided it is within the limitation period.

Facts

M/s Ukas Goods Carrier, a Goods and Transport Agency (GTA), filed a writ petition challenging a show cause notice dated February 6, 2021, and a consequential demand order dated August 26, 2021, issued by Respondent No. 4. The petitioner argued that as a GTA providing transportation services, it is not liable to pay tax under Section 9(3) of the GST Act, 2017, as the tax incidence falls solely on the recipient under the reverse charge mechanism. The petitioner also contended that the demand order exceeded the amount specified in the show cause notice, violating Section 75(7) of the GST Act, 2017. The respondents argued that the petition was not maintainable due to the availability of an alternative statutory remedy under Section 107 of the GST Act, 2017, and that disputed questions of fact were involved.

Key Issues

1. Whether the impugned demand order dated August 26, 2021, issued by Respondent No. 4 is without jurisdiction and beyond the scope of the Goods and Services Tax Act, 2017, specifically concerning the tax liability of a Goods Transport Agency (GTA) under Section 9(3) of the Act? 2. Whether the demand order dated August 26, 2021, which confirmed a demand exceeding the amount specified in the show cause notice dated February 6, 2021, is sustainable in light of Section 75(7) of the GST Act, 2017? Petitioner's Arguments: The petitioner contended that as a GTA, it is not the person liable to pay tax under Section 2(98) and Section 9(3) of the GST Act, 2017, and the tax incidence is solely on the recipient under the reverse charge mechanism. They further argued that the demand order exceeded the amount specified in the show cause notice, violating Section 75(7) of the GST Act, 2017, which mandates that the demand in the order shall not exceed the amount specified in the notice and shall not be confirmed on grounds other than those specified in the notice. Revenue's Arguments: The respondents challenged the maintainability of the writ petition, citing the availability of an equally efficacious statutory remedy of appeal under Section 107 of the GST Act, 2017. They also argued that the plea of jurisdiction raised by the petitioner was untenable due to disputed questions of fact, asserting that the petitioner was involved in intra-state and inter-state supply of goods, not just transportation services. However, they could not provide a cogent argument to justify the confirmation of a demand beyond the amount specified in the show cause notice.