M/S J.B. Rolling Mills LTD vs. State Of Hp And Others

Held

The High Court held that the writ petition was misconceived and not maintainable at the current stage. The Court referred to Section 74 of the Himachal Pradesh Goods and Services Tax Act, 2017, specifically sub-sections (5), (6), and (7). It explained that sub-section (5) allows a person chargeable with tax to pay the tax, interest, and a reduced penalty (15% of tax) before a notice under sub-section (1) of Section 74 is served, based on their own assessment or as ascertained by the proper officer. Upon such payment and intimation, the proper officer shall not serve a notice under sub-section (1) as per sub-section (6). If the amount paid falls short, the proper officer may proceed to issue a notice under sub-section (1) for the shortfall, as per sub-section (7). The Court observed that the notices in question were issued by the officer in exercise of powers under sub-section (5) of Section 74. The Court opined that the issuance of these notices does not, in itself, provide a cause of action to approach the High Court. The petitioner has the right to respond to a future show-cause notice if the respondents invoke sub-section (1) of Section 74, and thereafter, proceed according to law. The petition was therefore disposed of as not maintainable at this stage, and any interim orders were vacated.

Facts

The petitioner, M/s J.B. Rolling Mills Limited, filed a writ petition before the High Court of Himachal Pradesh challenging a notice dated 29.06.2024 issued by Respondent No. 3. This notice sought to deny the petitioner Input Tax Credit (ITC) amounting to Rs. 43,16,198/-, and also proposed to levy interest of Rs. 50,25,384/- and a penalty of Rs. 43,16,198/-. The petitioner contended that the show cause notice was issued without first issuing ASMT-10 and without appreciating that the petitioner had already paid tax to the sellers and possessed all necessary documents for claiming ITC. The petitioner argued they cannot be compelled to prove whether the seller discharged their tax liability.

Key Issues

1. Whether the notice dated 29.06.2024, issued under Section 75 of the GST Act for denying Input Tax Credit (ITC) and levying interest and penalty, is legally valid, particularly when it was allegedly issued without a preceding ASMT-10 notice and without considering the petitioner's payment of tax to sellers and possession of relevant documents? (Question of mixed law and fact, concerning Section 75 and principles of natural justice). Petitioner's Arguments: The petitioner argued that the impugned notice is invalid because it was issued without the mandatory prerequisite of an ASMT-10 notice. They further contended that they have fulfilled their obligations by paying tax to the sellers and possessing all requisite documents for claiming ITC, and thus, cannot be burdened with proving the seller's tax compliance. The petitioner sought quashing of the notice and withdrawal/cancellation of the proposed denial of ITC, interest, and penalty. Respondents' Arguments: The respondents, represented by the Additional Advocate General, argued that the petition is misconceived. The judgment does not explicitly detail the respondents' arguments regarding the specific provisions or precedents relied upon, beyond stating the petition is misconceived.