The Bombay High Court in the case of Vertiv Energy Pvt. Ltd. Versus UOI imposed a cost of Rs. 1 Lakh on assessee challenging show cause notice (SCN) alleging GST evasion of Rs. 231.78 crores.
The bench of Justice M.S.Sonak and Jitendra Jain has observed that show cause notice alleges that the Petitioner has availed ITC over the ITC available in GSTR-2A, wrongly availed and distributed incorrect ISD credit. The Petitioner has neither paid the suppliers within 180 days nor reversed the ITC with interest. There are allegations about incorrect disclosures of the value of supply in the respective returns, resulting in short payment of tax. There are allegations about short payment of tax liability under RCM and non-reversal of ITC regarding obsolete inventory. There are allegations of suppression of the correct supply value in the returns.
The bench noted that the show cause notice tentatively alleges evasion of GST to the extent of Rs. 231.78 crores. The show cause notice refers to several e-mails addressed to the Petitioner seeking clarification from the Petitioner and the alleged circumstances. No such clarifications, along with any documentary evidence or, in any event, satisfactory documentary evidence, were furnished by the Petitioner.
The Petitioner/assessee has challenged the Show Cause Notice issued under the Central Goods and Services Tax Act, 2017 on the grounds that the show cause notice is issued solely based on the observations of the Central Excise Revenue Audit (CERA) audit conducted by the Director General of Audit (Central), Mumbai, functioning under the control of Comptroller and Auditor General (“CAG).
The petitioner contended thar in terms of the law as clarified by the Court in Kiran Gems Private Limited case, the CAG or its officials have no jurisdiction to audit private companies like the Petitioner. The show cause notice, which is entirely based on CAG’s audit, which was itself without jurisdiction, is unsustainable, ultra vires and without jurisdiction. The interference by the Court is warranted without adverting to the rule of exhaustion of alternate remedies.
The department contended that the CAG or its officials did not audit the Petitioner. The audit, if any, was of the departments. Therefore, the decision in Kiran Gems Private Limited was not even remotely attracted to the present case. Merely because the returns filed by the Petitioner before the Respondents’ department may have been examined in the context of an audit of the Respondents’ department does not mean that the CERA/CAG has audited the Petitioner or the Petitioner’s accounts.
The court noted that the show cause notice is not based upon any audit undertaken by CERA/CAG and the CERA/CAG has undertaken no audit of the Petitioner, there is no necessity to go into the issue of whether the impugned show cause notice could be quashed or the writ of prohibition could be issued to the Respondents from proceeding any further in this matter.
The court held that no case has been made to entertain this Petition. Accordingly, this Petition is liable to be dismissed with costs of Rs.1,00,000 payable to K. E. M. Hospital within four weeks.
Case Details
Case Title: Vertiv Energy Pvt. Ltd. Versus UOI
Case No.: Writ Petition No. 17902 Of 2024
Date: 06 December 2024
Counsel For Appellant: Sriram Sridharan
Counsel For Respondent: JB Mishra
