M/S J.K.M. Infra Projects Limited vs. Union Of INDIA

Facts

The petitioner filed a writ petition before the Patna High Court challenging a show cause notice dated February 10, 2020, issued under Section 73 of the GST Act for the tax period February 2019 (financial year 2018-19). The petitioner also challenged an order dated March 12, 2020, and a demand notice dated March 17, 2020. The grounds for challenge included the lack of assigned reasons in the show cause notice and the absence of any adjudication proceeding or determination of tax, rendering the entire process illegal and a violation of natural justice. The petitioner sought a declaration that no tax, interest, or penalty could be levied without initiating adjudication proceedings. The respondent revenue authority was represented by learned Standing Counsel No. 11.

Held

The Court did not decide the merits of the case. Instead, following a similar order passed in C.W.J.C. No. 2847 of 2021, the Court permitted the petitioner to prefer an appeal against the impugned order before the Appellate Authority within four weeks from the date of the order. The Court directed that if an appeal was preferred within this period, the issue of limitation would not be raised or allowed to impede the adjudication of the appeal on merits. The Court also stipulated that an opportunity would be granted to the parties to place all essential documents and materials on record, and the petitioner undertook to cooperate fully. The appellate authority was directed to decide the appeal on merits, in compliance with the principles of natural justice, within eight weeks from the date of filing. The Court explicitly stated that it had not expressed any opinion on the merits of the case, and all issues were left open. Liberty was reserved to the parties to take recourse to other available remedies.

Key Issues

1. Whether the show cause notice dated February 10, 2020, issued under Section 73 of the GST Act for the tax period February 2019 (financial year 2018-19), the order dated March 12, 2020, and the demand notice dated March 17, 2020, are liable to be quashed for lack of assigned reasons and for being issued without initiating adjudication proceedings and determining the tax, thereby violating principles of natural justice and being without jurisdiction. 2. Whether tax, interest, and penalty can be levied in the present case without the initiation of any adjudication proceeding. Petitioner's arguments: The petitioner contended that the show cause notice, order, and demand notice were illegal, arbitrary, and without jurisdiction because they were issued without initiating any adjudication proceeding and without determining the tax liability. This, according to the petitioner, was a blatant violation of the principles of natural justice. Revenue's arguments: The learned Standing Counsel for the respondent revenue authority stated that a similar petition, C.W.J.C. No. 2847 of 2021 (M/s J.K.M. Infra Projects Limited Vs. Union of India & Ors.), was disposed of by the Court on April 29, 2021, and suggested that the present petition could be disposed of in light of that judgment.