Nektar Therapeutics (INDIA) PVT LTD vs. Union Of INDIA

Facts

The petitioner, Nektar Therapeutics (India) Pvt Ltd, filed a writ petition challenging a show cause notice dated April 17, 2023, issued by the Assistant Commissioner of Central Tax (Respondent No. 5). The petitioner also challenged a Final Audit Report dated December 27, 2022, issued by the Deputy Commissioner of Central Tax (Respondent No. 4). The petitioner contended that these actions were without jurisdiction, beyond statutory time limits, and retrospective. The show cause notice sought recovery of a refund previously granted to the petitioner, on the grounds that it was erroneously made. The petitioner argued that the refund claim was confirmed by the Customs, Excise & Service Tax Appellate Tribunal (CESTAT), whose order had attained finality.

Held

The Court held that the Assistant Commissioner of Central Tax, Circle VIII, Audit-II Commissionerate, Hyderabad (Respondent No. 5) was not the proper officer authorized to issue the show cause notice dated April 17, 2023, as per Notification No. 105/2018-GST dated February 9, 2018. The respondents, through their counsel, conceded this point. Consequently, the show cause notice was set aside. The Court also noted the petitioner's submission that the refund in question had been confirmed by CESTAT, an order that had attained finality. While not explicitly deciding on the recovery of the refund based on the CESTAT order, the setting aside of the show cause notice effectively halted the immediate recovery attempt. The Court directed that if a fresh show cause notice is to be issued, it must be by a proper officer, and such officer shall hold pre-show cause notice consultation with the petitioner. All contentions were kept open for future proceedings.

Key Issues

1. Whether the Assistant Commissioner of Central Tax, Circle VIII, Audit-II Commissionerate, Hyderabad (Respondent No. 5) is the proper officer authorized to issue the show cause notice dated April 17, 2023, under Notification No. 105/2018-GST dated February 9, 2018, for the recovery of an erroneously granted refund? Petitioner's Argument: The petitioner argued that Respondent No. 5 is not the proper officer as defined by Notification No. 105/2018-GST, which designates Additional or Joint Commissioners as the proper officers for such matters. Therefore, the show cause notice issued by Respondent No. 5 is without jurisdiction. Revenue's Argument: The learned counsel for respondents No. 2 to 6 conceded that Respondent No. 5 is not the proper officer as notified by the relevant circular. The respondents agreed that the show cause notice should be set aside with liberty to issue a fresh notice by a proper officer. 2. Whether the respondents are restrained from taking steps to recover the refund granted to the petitioner, given that the refund claim was confirmed by CESTAT and its order has attained finality? Petitioner's Argument: The petitioner contended that due to the finality of the CESTAT order confirming the refund, principles of official discipline and propriety demand that respondents be restrained from initiating recovery proceedings for the already granted refund.