M/S Padam Kumar Jain Thro Its Proprietor Namely Padam Kumar Jain vs. The State Of Jharkhand, Through The Commissioner, State Tax Department

Held

The Court disposed of the writ petition in terms of the detailed reasons stated in its order dated 8th July 2024, passed in a similar writ petition, W.P(C) No.3679 of 2024, titled “M/s Padam Kumar Jain v. State of Jharkhand and Ors.” While the specific reasoning from the prior order is not detailed in this judgment, the implication is that the Court found merit in the petitioner's challenge to the jurisdiction of the State Tax Officer to issue the show cause notice for the sale of securities, which the petitioner asserts is not a taxable transaction under the JGST Act. The operative direction was to dispose of the present petition in line with the prior order, suggesting that the show cause notice was likely quashed or set aside, or the respondents were directed to reconsider the matter based on the established legal position regarding the taxability of securities transactions. The ratio would likely pertain to the jurisdictional limits of tax authorities when issuing notices for transactions that are demonstrably outside the purview of the GST Act.

Facts

The petitioner, M/s. Padam Kumar Jain, a proprietorship concern, filed a writ petition challenging a show cause notice and summary of show cause notice issued by the State Tax Officer, Chaibasa Circle (Respondent No. 4). The notice, dated 01.02.2024, was issued under Section 74(1) of the Jharkhand Goods and Services Tax Act, 2017 (JGST Act). The impugned notice proposed to impose tax, interest, and penalty on transactions of sale of securities (stock) amounting to Rs. 60,56,47,280/-, which the petitioner claims are not taxable under the JGST Act. The petitioner argued that the issuance of the show cause notice was without jurisdiction as the transaction was not taxable. The Court noted that a similar issue was dealt with in a previous writ petition, W.P(C) No.3679 of 2024, titled “M/s Padam Kumar Jain v. State of Jharkhand and Ors.”

Key Issues

1. Whether the show cause notice issued under Section 74(1) of the JGST Act, 2017, by the State Tax Officer (Respondent No. 4) is without jurisdiction, considering the petitioner's contention that the transaction of sale of securities amounting to Rs. 60,56,47,280/- is not taxable under the Act. Petitioner's Arguments: The petitioner argued that the show cause notice was wholly without jurisdiction. They contended that the State Tax Officer had conferred jurisdiction upon himself by issuing the notice under Section 74(1) of the JGST Act, despite the fact that the transaction of sale of securities is admittedly not taxable under the JGST Act, 2017. The petitioner relied on the principle that a notice issued without jurisdiction is a nullity. Respondents' Arguments: The judgment does not record any specific arguments made by the respondents in this particular writ petition. However, the issuance of the show cause notice implies the respondents' belief that the transaction might be taxable or that there are grounds to investigate potential tax liability.