Annapurna Rice And Pulses Mills vs. Union Of INDIA

Facts

The petitioner, Annapurna Rice and Pulses Mills, manufactures and sells wheat flour and other flours under registered and unregistered brand names. They have been registered under GST since July 2017 and claim to have disclosed all sales and paid applicable taxes. The petitioner avails exemption from GST based on Notification No. 28/2017 dated 22.09.2017 for zero-rated supplies of their products. On September 15, 2019, the petitioner's premises were visited by respondent no. 2, and their manufacturing activities were questioned. Subsequently, a show cause notice was issued under Section 74(1) of the Central Goods and Services Tax Act, 2017, proposing a demand for duty, interest, and penalty for the period from 18.09.2020 to 30.09.2020. The petitioner challenged this notice, arguing it was issued under the wrong provision of law.

Held

The Court did not decide the substantive issues raised by the petitioner. Instead, the learned advocate for the petitioner sought permission to withdraw the petition. The request was to allow the petitioner to raise all contentions, including the issue of jurisdiction, in their reply to the show cause notice. The Court acceded to this request, and the petition was disposed of as withdrawn. Therefore, no findings were made on the sustainability of the show cause notice or the applicability of Section 74 versus Section 73 of the CGST Act. The operative direction was to permit the withdrawal of the petition.

Key Issues

1. Whether the show cause notice issued under Section 74(1) of the Central Goods and Services Tax Act, 2017, is legally sustainable when the petitioner claims there was no suppression of facts, evasion of tax, short payment of tax, or erroneous refund claim, and the authority ought to have proceeded under Section 73 of the Act? The petitioner argued that the show cause notice was issued under the wrong provision of law. They contended that there was no suppression of facts or tax evasion, and therefore, the extended period of limitation under Section 74 was wrongly invoked. The petitioner asserted that if the department believed they were not entitled to the exemption, a notice under Section 73, within the specified limitation period, should have been issued. They relied on the decision in M/s. Nkas Services Private Limited vs. The State of Jharkhand and others. The revenue or State did not record any arguments in the judgment.