South Eastern Coalfields Limited vs. Principal Commissioner, CGST, Raipur

Held

The Court held that the petitioner has a remedy to file a reply to the show cause notice before the issuing authorities. It was observed that the present case does not involve a violation of the principles of natural justice or proceedings that are wholly without jurisdiction. The Court found that Respondents No. 2 and 3 possess the legal authority to issue such a show cause notice under Section 73 of the CGST Act, 2017. Therefore, no exceptional case was made out for interference. The Court noted that the earlier show cause notices were dropped, and while the State counsel clarified that the second notice was not dropped due to satisfaction with the reply but due to information made available by the department after investigation regarding non-payment of GST under RCM against payments made under Environment Cess and Development Cess for the period July 2017 to August 2021, the primary reasoning for dismissal was the availability of an alternative remedy and the absence of jurisdictional error or violation of natural justice. The petition was dismissed.

Facts

The petitioner, South Eastern Coalfields Limited (SECL), a Public Sector Undertaking and subsidiary of Coal India Limited, challenged a show cause notice dated January 16, 2023, issued by Respondent No. 2 (Additional Commissioner, CGST, Raipur) under Section 73 of the CGST Act, 2017. SECL is registered under GST and administratively controlled by State Tax Authorities. The dispute concerns SECL's liability to deposit GST on CG Development Cess and CG Environment Cess under the Reverse Charge Mechanism (RCM). Previously, the State GST authorities issued two show cause notices for the period July 2017 to July 2021. The first was dropped on April 27, 2022, and the second was also dropped on June 13, 2022, after SECL filed a reply. Subsequently, Respondent No. 2 issued the third show cause notice, which is the subject of this petition.

Key Issues

1. Whether the issuance of a third show cause notice by Respondent No. 2 under Section 73 of the CGST Act, 2017, with the same averments as previously dropped notices, is permissible and not without jurisdiction? Petitioner's Arguments: - The petitioner argued that once the first and second show cause notices, containing identical allegations, were dropped by the authorities, there was no occasion or reason to issue a third show cause notice. - They contended that issuing a show cause notice for the same cause of action multiple times is impermissible. - Reliance was placed on the Supreme Court judgment in Godrej Sara Lee Ltd. Vs. Excise and Taxation Officer-cum-Assessing Authority, arguing that the efficacious alternative remedy would not apply when proceedings are wholly without jurisdiction. Respondents' Arguments: - The respondents argued that the earlier show cause notices were issued by State authorities, while the present notice was issued by Central GST (Respondent No. 2). - They submitted that the earlier inquiry or scrutiny was not conducted properly, necessitating a fresh show cause notice. - It was also argued that a simple show cause notice has been issued, and the petitioner is at liberty to file a reply. - Reliance was placed on the Allahabad High Court judgment in Elesh Agrawal Vs. Union of India, which held that a writ petition challenging a show cause notice cannot be allowed in extraordinary jurisdiction, and the petitioner should file a reply.