M/S Cadila Pharmaceuticals LTD Th Narendra Brahmbhatt vs. Union Of INDIA Th Secretary Ministry Of Defence Deptt Of Revenue And Others

Held

The High Court disposed of the writ petition by holding that the impugned show cause notice shall remain dormant and shall not be given effect to until the litigation between the parties pending before the Supreme Court is finally disposed of. The Court further provided that the proceedings in the show cause notice will be contingent upon the outcome of the SLPs pending before the Supreme Court. The Court also stipulated that if the show cause notice is proposed to be given effect to, the aggrieved party would be at liberty to challenge it before the appropriate forum in accordance with the law. Any excise duty/cess paid by the petitioner in compliance with the show cause notice would remain subject to the ultimate outcome of the Supreme Court litigation. The Court did not decide on the merits of the show cause notice itself.

Facts

The petitioner, M/s Cadila Pharmaceuticals Ltd., challenged a show cause notice dated December 28, 2020, issued by the GST authorities. The notice proposed the recovery of ₹3,20,47,649/- from the petitioner, comprising Basic Excise Duty (BED), Education Cess (Ed Cess), and Secondary and Higher Education Cess (SHE Cess). The respondents, Union of India and others, stated that the notice was a protective measure to save litigation and would only be acted upon after the decision of Special Leave Petitions (SLPs) pending between the parties before the Supreme Court. The High Court heard both parties and considered the nature of the controversy and the submissions made.

Key Issues

1. Whether the impugned show cause notice dated 28.12.2020, proposing recovery of ₹3,20,47,649/- towards Basic Excise Duty, Education Cess, and Secondary and Higher Education Cess, is valid and can be proceeded with at this stage? Petitioner's Contention: The petitioner sought to challenge the validity and enforceability of the show cause notice. While the specific grounds of challenge are not detailed in the provided text, the act of filing a writ petition indicates a dispute with the notice itself. Respondent's Contention: The respondent (Union of India & Ors.) argued that the show cause notice was a protective measure issued solely to safeguard the revenue's interest and prevent potential litigation issues. They contended that the notice would not be given effect to until the Special Leave Petitions (SLPs) pending between the parties before the Supreme Court were finally decided. They relied on the pendency of these SLPs as a reason for the current status of the notice.