The Digital Payment Solution Giant, PayU has challenged the show cause notice (SCN) issued by the Directorate General of GST Intelligence (DGGI) before Bombay High Court. The show cause notice alleges that PayU has availed the wrongful Input Tax Credit (ITC) worth Rs. 38 Crores.
The bench of Justice M.S. Sonak and Justice Jitendra Shantilal Jain while dismissing the petition of PayU asked PayU to file a reply to the show cause notice before the adjudicating authority.
The bench stated that unless the High Court is satisfied that the show cause notice was totally non est in the eyes of law for absolute want of jurisdiction of the authority and to investigate the acts, the writ petition should not be entertained, for mere asking and as a matter of routine. The writ petitioner should merely be directed to respond to the show cause notice and raise all defences and contentions that may be highlighted in the petition.
The Petitioner/assessee has rushed to the Court to challenge a show cause notice dated 2nd August 2024 issued by the Directorate General of GST Intelligence (DGGI).
The Petitioner contended that complete disclosures were made during the audit, and the audit team flagged specific issues. The Petitioner agreed to the audit team’s observations and voluntarily deposited the amount vide DRC-03 debit entries dated 19 August 2023 and 23 August 2023.
The petitioner contended that once the Petitioner was audited and complete disclosures were made, there was no justification for either alleging any suppression or invoking the extended period of limitation under section 74 of the Central Goods and Services Tax Act, 2017. PayU referred to Explanation 2 in section 74, which defines “suppression” for the purposes of section 74 and the invocation of an extended period of limitation.
The department contended that full opportunity will be offered to the Petitioner, and there is no case made out to interfere with the impugned show cause notice. He refers to the findings of the investigations based upon which a decision was taken to issue a show cause notice to the Petitioner. The findings make out the prima facie case of suppression and call for the invocation of an extended limitation period. All the contentions can be raised in response to the show cause notice.
The department submitted that there is no jurisdictional error and the contentions now raised would involve investigations into factual matters.
The court noted that the audit report had referred to the wrongful input tax credit to the extent of Rs.6,20,590. The investigations have now prima facie revealed availment and utilisation to the extent of Rs.38.33 crores.
The court held that the petitioner is at liberty to point out how this is not correct. But, based upon all these materials, we are not satisfied that a case has been made to interfere with the show cause notice itself.
Case Details
Case Title: PayU Payments Private Limited Versus The Union of India
Case No.: Writ Petition No. 4605 Of 2024 With Interim Application No.3469 Of 2024 In Writ Petition No.4605 Of 2024
Date: 10/12/2024
Counsel For Petitioner: Senior Advocate Darius Shroff
Counsel For Respondent: J. B. Mishra
