The Madhya Pradesh High Court has held that in the GST evasion case a detailed show-cause notice which runs into 82 pages has been issued to the petitioner and 11 other purchasers as well as respondent No. 3/supplier. Therefore, only on the instance of the petitioner the entire show-cause notice cannot be quashed.
The bench of Justice Vivek Rusia and Justice Gajendra Singh has observed that petitioner is required to establish its defence by producing documents before the competent authority, who shall examine the invoices and bills generated by all the noticees during the enquiry.
The Petitioner is a proprietorship firm engaged in trading of Iso Propyl Alcohol, Hydrazine Hydrate, Acetone Hydrogen Peroxide, Alpha Olefine Sulphonate Liquid, Iso Nicotinic Acid, Caustic Soda Flaxes, Soda Ash, D- Glucitol (Sorbitol), Phosphoric Acid, Acetic Acid situated at 165-B, Sector- E, Sanwer Road, Indore.
The CGST and Central Excise, Indore Commissionerate received information that the petitioner and 11 others had availed fraudulent Input Tax Credit (ITC) on the invoices issued by respondent No.3 for the Financial Year 2019-20 and 2020-21. So far as the petitioner is concerned, an amount of Rs. 27,22,284/- was availed as ITC during the aforesaid two financial years.
In the enquiry it was also revealed that the business of petitioner is in sale and purchase of Industrial Chemical whereas respondent is the supplier of FMCG Goods.
A summon was issued and subsequently inspection was carried out in the business premises of the petitioner on 20.10.2023. Petitioner has submitted a detailed representation.
The show- cause notice has been issued to the petitioner and 11 others who availed the ITC. The supplier has also been served with a show-cause notice as to why penalty should not be imposed under Sections 122(1)(ii) along with 122(1)(x), (xii), (xvi) and (xvii) read with Sections 127 and 122(3)(d) of the CGST Act.
The Petitioner challenged the show-cause notice as well as the validity of Section 16(2)(c) of the CGST Act on the ground that it cast unwarranted and uncalled obligation on the innocent purchaser which is beyond its control and almost impossible to ensure deposit of tax discharged by the supplier with public exchequer in order to avail the Input Tax Credit against the supply.
The petitioner contended that on account of failure on part of supplier, the petitioner who is an innocent purchaser is being made to suffer unnecessarily by participating in the proceeding.
The court while dismissing the petition held that in order to avoid participation in the enquiry, petitioner is challenging the constitutional validity.
Case Details
Case Title: M/S Shree Kishna Chemicals Through Its Proprietor Pankaj Chittlangia Versus Union Of India Through Secretary And Others
Case No.: Writ Petition No. 5692 Of 2025
Date: 18/02/2025
Counsel For Petitioner: L.C.Patne
Counsel For Respondent: Prasanna Prasad
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