The Madras High court has held that Amnesty Scheme benefits can be availed only in absence of bunching of Show Cause Notice (SCN).
The bench of Justice Krishnan Ramasamy quashed the bunching of show cause notices issued for separate years, the show cause notices may be split up regarding assessment years and separate notices may be issued for each and every assessment years separately in order to avail Amnesty Scheme, which is proposed to be launched during November 2024.
Background
The petitioner/assessee has challenged the show cause notice along with summary notice in Form GST DRC-01 under section 74 of the CGST Act.
The show cause notice demands differential amounts stated in the tabular column stating that the petitioner was engaged in misclassification of two-wheeler seats under Customs Tariff Heading (CTH) 9401 instead of CTH 8714 and the same resulted in alleged short payment of 18% GST instead of 28% GST for the period between July 2017 and October 2023.
Arguments
The assessee contended that on account of nuanced interpretation of entries of the Customs Tariff Act, a confusion prevailed in the industry concerning correct classification and rate to be adopted for supply of two wheeler seats and in view of the confusion that prevailed as to whether the two wheeler seats are to be classified under CTH 9401 or CTH 8714.
The assessee submitted that it deposited 10% differential GST amount under protest for the disputed period from 15.11.2017 to 31.10.2023 which amounts to Rs.1,24,74,14,950 and the payment was made by the petitioner ‘under protest’ under the bonafide understating that the two wheeler seats would appropriately be fall under under CTH 9401 and not CTH 8714.
A commercial decision was taken by the department by classifying the subject goods under CTH 8714 under protest, for which , 28% GST has to be deposited. Under the stated circumstances, the present show cause notice was issued towards payment of tax liability. Already the petitioner has paid 10% of GST amount to the tune of Rs.124 crores.
The assessee urged that since the show cause notice was issued demanding tax in respect of six assessment years, the petitioner is not able to avail opportunity of Amnesty scheme which is scheduled to be come into force from 1st November 2024 and in the event of respondent issuing separate show cause notices for each and every assessment year, the petitioner can very well avail Amnesty scheme enabling it to get waiver of interest as well as penalty on its tax liability. Therefore, the show cause notice is liable to be set aside.
Read More: CBIC Notifies Amnesty Scheme Effective 1 November 2024
Conclusion
The court quashed the bunching of show cause notices and directed the department to issue separate show cause notices regarding six assessment years within a period of two weeks from the date of receipt of copy of this order, in which case, the petitioner shall not raise the issue of limitation.
The court while disposing of the petition held that the amount of Rs.1.25 crores already deposited by the petitioner, the petitioner shall not claim any refund of the amount deposited with the department.
Case Title: Uno Minda Limited V/S The Joint Commissioner of GST and Central Excise, Gst Bhawan
Citation: W.P.No.27776 of 2024 & WMP.Nos.30287 & 30288 of 2024
Counsel for the Petitioner: Raghavan Ramabadran
Counsel for the Respondent: B.Ramana Kumar
Decision Date: 23.09.2024
