Naveen Sports Wears vs. The Superintendent Of CGST And Central Excise

Facts

The petitioner, Naveen Sports Wears, obtained GST registration on November 30, 2018, and opted for the compounded levy scheme under Section 10 of the GST enactment, filing quarterly returns in Form GST CMP-08 and annual returns in GSTR-04. The petitioner failed to file Form ITC-03, detailing inputs lying in stock and input tax credit availed/reversed, as required by Rule 3(3) of the GST Rules. Consequently, a Show Cause Notice was issued by the second respondent. Subsequently, another Show Cause Notice was issued on August 5, 2026, for denying the benefit of compounded levy. As the petitioner did not respond to this notice, the first respondent passed an order in Form GST CMP-07 on August 24, 2026, denying the compounded levy benefit. A consequential Show Cause Notice in Form GST DRC-01 was issued by the second respondent on August 28, 2026, for the period 2020-21 to 2024-25. The petitioner later filed the required ITC-03 on September 27, 2026, albeit belatedly.

Held

The Court held that since the petitioner had belatedly filed Form ITC-03 on September 27, 2026, and considering the petitioner's status as a tiny undertaking, it was inclined to quash the impugned orders. The Court reasoned that if the petitioner's case for compounded levy under Section 10 was accepted, the subsequent proceedings initiated under Section 74 would be rendered nugatory. The Court directed the first respondent to pass a fresh order, taking into account the belated compliance with Section 10 read with Rule 3 of the respective GST enactment. The petitioner was also directed to provide a proper reply to the Show Cause Notice preceding the impugned order within thirty days of receiving the Court's order, which the first respondent was to consider before passing a fresh order within three months of receiving the reply. The Court also suggested that the respondents may allow the petitioner to collect and pay tax under the compounded levy, without prejudice to their rights. No issue was expressly left undecided.

Key Issues

1. Whether the impugned order in Form GST CMP-07 dated 24.08.2026 and the consequential Show Cause Notice in Form GST DRC-01 dated 28.08.2026 are without jurisdiction, barred by limitation, erroneous on facts, and violative of principles of natural justice, as contended by the petitioner? Petitioner's Arguments: The petitioner argued that the impugned order and show cause notice were passed without jurisdiction, were barred by limitation, were factually erroneous, and violated principles of natural justice. The petitioner highlighted that they had belatedly complied with the requirement of filing Form ITC-03 on September 27, 2026, and that the proceedings initiated under Section 74 would become nugatory if their case for compounded levy was accepted. They also emphasized their status as a tiny undertaking. Revenue's Arguments: The judgment does not record any specific arguments made by the revenue or state.