M/S Awan Traders And Ors. vs. Union Of INDIA And Ors. (Finance)

Held

The Court held that the writ petition was premature and liable to be dismissed because the petitioners had an equally efficacious alternative remedy under the statute. The Court relied on its previous judgment in M/s New Gee Enn & Sons vs. Union of India, which held that the aggrieved person's remedy is to file a reply to the show cause notice, submit requisite material, and contest the demand on merits. If an order confirming the demand is passed under Section 74(9) of the CGST Act, the aggrieved party has a remedy of appeal under Section 107. The Court directed that where replies have not yet been filed, petitioners should do so within six weeks, and proceedings should be concluded within three months of receiving the reply. Where final orders have been passed, petitioners have three months from the date of the order to avail the appellate remedy. The Court clarified that its observations on the merits were prima facie and not a final opinion.

Facts

The petitioners, M/s Awan Traders and others, filed a writ petition challenging show cause notices (SCNs) issued by the Superintendent, CGST and CX Range-I, Srinagar, under Section 74(1) of the CGST Act, 2017, and the J&K GST Act, 2017. These SCNs followed an investigation by the Directorate General of GST Intelligence (DGGI) into alleged non-payment of GST on cross-LoC trade. The petitioners had previously treated cross-LoC trade as zero-rated sales under Section 55 of the erstwhile J&K Value Added Taxes Act, 2005, and continued this practice under the GST regime, omitting these transactions from their returns for financial years 2017-2018 and 2018-2019. The DGGI investigation revealed substantial unaccounted trade volumes, leading to the issuance of the SCNs.

Key Issues

1. Whether the writ petition challenging show cause notices issued under Section 74(1) of the CGST Act, 2017, is maintainable before this Court, considering the availability of an alternative statutory remedy. Petitioner's Contention: The petitioners invoked the extraordinary writ jurisdiction under Article 226 of the Constitution of India, challenging the SCNs on various grounds, including lack of jurisdiction. They did not file a reply to the SCNs but directly approached the High Court. Respondent's Contention: The respondents argued that the remedy available to the petitioners was to respond to the SCNs by filing a reply. They contended that the writ petition was premature and that the petitioners had an equally efficacious alternative remedy under the statute, citing a previous judgment of this Court in M/s New Gee Enn & Sons vs. Union of India.