M/S National Book Distributors vs. Assistant Commissioner State Tax

Facts

The petitioner, M/s National Book Distributors, filed a writ petition challenging a show cause notice dated August 19, 2026, issued by the Assistant Commissioner, State Tax, under Section 74(1) read with Section 74(5) of the CGST/SGST Act, 2017. The petitioner contended that the notice erroneously included sales made by another entity, National Book House, which is not registered under the Act. Furthermore, the petitioner argued that the show cause notice was barred by limitation, as it covered transactions up to the Financial Year 2020-21. The respondent argued that the proprietor runs both firms from the same premises and that National Book House is a sham entity created for turnover suppression. The respondent also cited Section 74(10) of the Act regarding the time limit for issuing orders.

Held

The High Court declined to interfere with the show cause notice at this stage. The Court held that the petitioner has an adequate opportunity to present their case before the competent authority by filing a reply to the show cause notice, which also includes a provision for personal hearing. The Court reiterated the well-settled principle that a challenge to a show cause notice can only be entertained if the issuing authority lacks competence. Since the petitioner did not contend that the issuing authority was incompetent, the writ petition was disposed of with liberty to the petitioner to file a reply to the show cause notice. All contentions raised by the petitioner are to be dealt with by the authority as per law. No specific finding was given on the merits of the petitioner's arguments regarding the inclusion of sales from National Book House or the limitation period, as these were to be addressed by the respondent authority.

Key Issues

1. Whether the show cause notice issued under Section 74(1) of the Uttarakhand Goods and Services Tax Act, 2017, is liable to be quashed on the ground that it erroneously includes sales made by an entity not registered under the Act, namely National Book House, thereby violating the principles of natural justice and the scope of the notice. 2. Whether the show cause notice is barred by limitation, as it pertains to transactions made up to the Financial Year 2020-21, and if the period stipulated in Section 74(10) of the Act has expired. Petitioner's contentions: The show cause notice is flawed as it includes sales of National Book House, a separate entity not registered under the Act. The notice is also barred by limitation as it covers transactions up to FY 2020-21. Respondent's contentions: The proprietor runs both National Book Distributors and National Book House from the same premises. National Book House is alleged to be a sham firm created for turnover suppression. The respondent relies on Section 74(10) of the Act to argue that the notice is within the prescribed time limit for issuing an order.