M/S U.R Sinter Private LTD. vs. State Of Hp And Others

Held

The High Court held that the show cause notice dated 05.12.2018 (Annexure P-2) did not fulfill the criteria laid down by the Hon'ble Supreme Court in M/s Tata Steel Limited vs. Union of India. The Court found the notice to be cryptic and lacking in establishing that the petitioner's alleged actions were on account of fraud, willful misrepresentation, or suppression of facts. Consequently, the Court quashed the show cause notice and the impugned order dated 20.05.2019 (Annexure P-3). The Court granted liberty to the assessing authority to proceed afresh by issuing a fresh show-cause notice under Section 74 of the HPGST Act, if advised. The parties agreed that if a fresh show-cause notice is issued within 60 days from the date of the order, it shall be deemed to be within limitation and the petitioner would respond on merits. The ratio decidendi is that proceedings under Section 74 of the GST Act require specific factual basis demonstrating fraud, willful misstatement, or suppression of facts, which must be evident from the show cause notice itself, and a mere recitation of the statutory language is insufficient.

Facts

The petitioner, M/s U.R. Sinter Private Ltd., filed a writ petition before the Himachal Pradesh High Court challenging a show cause notice dated 05.12.2018 and an impugned order dated 20.05.2019. The respondents were the State of Himachal Pradesh and its authorities. The case involved proceedings initiated under Section 74 of the HPGST Act concerning alleged non-payment, short payment, or erroneous refund of tax, or wrong availment/utilization of input tax credit due to fraud, willful misstatement, or suppression of facts to evade tax. The High Court noted that the show cause notice was cryptic and did not establish the alleged acts were due to fraud, willful misrepresentation, or suppression of facts.

Key Issues

1. Whether the show cause notice dated 05.12.2018, issued under Section 74 of the HPGST Act, sufficiently establishes that the alleged non-payment or short payment of tax, or erroneous refund, or wrong availment/utilization of input tax credit was due to fraud, willful misstatement, or suppression of facts to evade tax, as required by Section 74 of the HPGST Act and as interpreted by the Hon'ble Supreme Court in M/s Tata Steel Limited vs. Union of India. Petitioner's contention: The show cause notice is cryptic and fails to demonstrate the foundational facts leading to the inference of fraud, willful misrepresentation, or suppression of facts, thus not fulfilling the criteria laid down by the Hon'ble Supreme Court. Respondents' contention: Not recorded in the judgment.