M/S Jorabat Shillong Expressway Limited vs. Union Of INDIA And 4 Ors.

Held

The Court held that while the writ petition was not devoid of merit, it was premature at this stage. The Court noted that the petitioner had approached the High Court against a show cause notice issued under Section 74 of the CGST Act and MGST Act, proposing a demand for GST, interest, and penalty on annuity payments. Instead of responding to the notice, the petitioner had challenged it directly. The respondents submitted that the matter had not been finally decided and that they were bound to consider the Karnataka High Court's ruling. Therefore, without further delving into the merits of the case, the Court was not inclined to entertain the writ petition at this juncture. The Court disposed of the writ petition with a direction for the petitioner to participate in the proceedings initiated by the show cause notice. The respondents were directed to accept the petitioner's response to the show cause notice, if filed within 30 days from the date of the order, and consider it in accordance with the law. The issue of the validity of the circular and the show cause notice was not decided on merits.

Facts

The petitioner, M/s Jorabat Shillong Expressway Limited, filed a writ petition challenging a Demand cum Show Cause Notice dated 30.09.2023, issued by the Directorate General of GST Intelligence (DGGI) under Section 74 of the CGST Act and MGST Act. The notice proposed a demand for GST on annuity received by the petitioner from the National Highway Authority of India. The petitioner contended that this demand violates exemption notifications and is based on an impugned circular dated 17.06.2021 and a recommendation from the 43rd GST Council Meeting. The petitioner argued that responding to the show cause notice would be futile as the respondents had already demonstrated a firm stand, citing a Karnataka High Court judgment that had set aside the impugned circular.

Key Issues

1. Whether the Demand cum Show Cause Notice dated 30.09.2023, issued under Section 74 of the CGST Act and MGST Act, is illegal and without jurisdiction, particularly in light of exemption notifications concerning annuity payments for road construction? Petitioner's arguments: The petitioner argued that the demand for GST on annuity payments is in direct contradiction and violation of exemption notifications dated 28.06.2017, 13.10.2017, 29.06.2017, and 09.11.2017. They further contended that the impugned circular dated 17.06.2021, which formed the basis of the show cause notice, was declared bad in law and set aside by the Karnataka High Court in the case of DPJ Bidar-Chincholi (Annuity) Road Project Pvt. Ltd. vs. Union of India. Therefore, filing a response to the show cause notice would be a futile exercise, and the Court's interference was necessary to quash the circular and the notice. Respondents' arguments: The respondents argued that despite the Karnataka High Court's ruling on the circular, the issue had not been predetermined, and an inflexible stand had not been taken. They contended that the matter was still to be decided and that the writ petition was premature, as the petitioner had not yet responded to the show cause notice.