The Calcutta High Court has held that the pre-show cause notice (SCN) reply To be considered before issuing SCN under GST.
The bench of Chief Justice T.S. Sivagnanam and Justice Hiranmay Bhattacharyya has observed that the department should consider the reply dated 18th July, 2024 to the intimation issued earlier, deal with those issues and then proceed to issue a show-cause notice.
The petitioners had filed the writ petition challenging a show-cause notice issued under Section 74(1) of the CGST Act, 2017 and W.B.G.S.T. Act, 2017 read with Rule 142(1)(a) of the Rules for the financial year 2023-24.
The Single Bench opined that the writ petition is not maintainable against the show-cause notice and in support of such conclusion, several decisions were referred to.
The petitioner contended that pto issuance of the show-cause notice, an intimation of tax ascertained as payable under Section 74(5) was issued to the appellants. In the intimation, certain particulars were given and it was stated that the appellants have claimed input tax credit against the alleged inward supply of goods from non-existing entities, whose registrations have been cancelled.
The intimation has advised the appellants to pay the tax ascertained, failing which the appellants were informed that show-cause notice will be issued under Section 73(1)/74(1).
The appellants have submitted a detailed explanation and also enclosed certain documents in support of their contention and relied upon various decisions. Thus, when the authority has thought fit to exercise its powers under Section 74(5), he is enjoined upon a duty to consider the reply before it takes a decision to issue a show-cause notice under Section 74(1) of the Act.
The court found that the show-cause notice is a replica of the intimation given earlier and all that the assessing officer has said is that the reply furnished by the appellants in response to the intimation is not found to be satisfactory and hence, not acceptable. The remaining portion of the show-cause notice has been copied from the earlier intimation and the show-cause notice does not deal with any of the contentions, which were raised by the appellants in their reply to the intimation dated 18th July, 2024.
The court quashed the show-cause notice issued under Section 74(1) and remanded the matter back to the assessing authority to consider the reply and if it still finds it to be not satisfactory, it will be well-open to the authority to proceed in accordance with law.
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Case Details
Case Title: M/s Jyoti Tar Products Private Limited & Anr. Versus The Deputy Commissioner, State Tax, Shibpur Charge, WBGST & Ors.
Case No.: M.A.T. 2291 of 2024 With IA No. CAN 1 of 2024
Date: 21.01.2025
Counsel For Petitioner: Ankit Kanodia Ms. Megha Agarwal Mr. Piyush Khaitan
Counsel For Respondent: Mr. A. Ray, Ld. G.P., Md. T. M. Siddique, Sr., Adv. Mr. N. Chatterjee, Mr. T. Chakraborty, Mr. S. Sanyal
