The Bombay High Court has held that the GST department cannot adjudicate show cause notice (SCN) after 6 years citing absence of statutory provisions.
The bench of Justice K. R. Shriram and Justice Jitendra Jain have observed that relegating petitioner to attend the show cause notice would be unfair, unreasonable and gross abuse of the power. The department has not filed any evidence to show even prima-facie that the show cause notice could not be adjudicated because of the overall functioning of the department on account of implementation of GST.
The petitioner/assessee has challenged a show cause notice issued by Respondent department by which department are seeking to add the value of bought out goods procured and supplied directly to the customers of Petitioner to the assessable value of the goods manufactured in the factory of Petitioner. These goods admittedly do not enter Petitioner’s factory. The suppliers have paid excise duty and Petitioner has not claimed any duty credit on these goods.
The show cause notice was issued by respondent-department calling upon Petitioner to show cause why differential Central Excise Duty should not be demanded and recovered by enhancing assessable value on account of supply of bought out items which were directly supplied by the suppliers of Petitioner to the site of Petitioner’s customers. Petitioner was also called upon to show cause why interest should not be charged on the differential Excise Duty demand and penalty should not be imposed under Section 11AC of the Central Excise Act, 1944.
Under a cover of letter, Petitioner complied with the show cause notice by filing a reply running into more than 400 pages giving all the documents and submissions as to why the show cause notice should be dropped.
The petitioner attended a personal hearing before the Respondent-department and made submissions for dropping of the show cause notice. Petitioner also filed additional submissions, pursuant to the personal hearing, under a cover of letter, which too consisted of almost 500 pages.
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However, for a period of almost 6 years, the show cause notice was not adjudicated. Out of the blue, Petitioner was informed by the Superintendent (Adj) of CGST, Pune-I Commissionerate that a personal hearing was fixed before the Respondent-department. One day before the personal hearing, Petitioner filed additional submissions contending that the proceedings are required to be dropped on ground of delay in not adjudicating the impugned show cause notice.
The court held that the general bald reason given without any evidence with respect to the present impugned show cause notice cannot be accepted. Also it is not the case of Revenue that post July 2017 no order in case of any assessee could be passed because of GST implementation. This itself falsifies Respondent’s justification. The department has admitted that it was due to oversight that the show cause notice could not be adjudicated.
The Court while allowing the petition quashed the show cause notices which were not decided after a long delay.
Case Title: Shahaji Bhanudas Bhad Versus The Union of India
Case No.: Writ Petition No.12394 Of 2023
Date: 03/09/2024
Counsel For Petitioner: Prakash Shah
Counsel For Respondent: P. S. Cardoza