In a major setback to Hero Motocorp, Rajasthan High Court, Jaipur Bench has held that the show cause notice demanding 10% extra GST cannot be quashed citing its issuance only to one manufacturer and not others.
The bench of Justice Pankaj Bhandari and Justice Ganesh Ram Meena has observed that merely because the petitioner has been given notice and his counterparts have not been given notice, the same cannot be said to be bad in law. Merely on issuing of the show-cause notice, writ jurisdiction cannot be invoked for the very reason that the petitioner has right to file reply to the show-cause notice and as per the CGST Act, they have a right to be heard before any order is passed on the show-cause notice.Â
Background
The petitioner, Hero Motocorp and all other similarly situated manufacturers have been paying 18% GST since 2017. The department has issued the notice seeking to levy 28% GST.
The petitioner contended that if the 28% GST is levied, it would result in closure of the establishment of the petitioner-company, as its similarly situated counterparts would get the benefit. The circulars have been issued by the Central Board of Indirect Taxes and Customs wherein, it is mandated that before issuing any show-cause notice if there is any change in the interpretation of some issue pertaining to the prevalent trade practice, it would be referred to the Board. The show-cause notice has been issued without referring the matter to the Board as well as GST Council and without obtaining advance ruling.
The petitioner contended that by issuing show-cause notice, the department want to levy 28% GST instead of prevalent 18% GST, which the petitioner and his counterparts have been paying since 2017. Such levy of additional 10% GST would result in payment of thousand crores of tax, which will seriously hamper the business of the petitioner-company.
The department contended that the show-cause notice cannot be challenged by way of writ petition. The petitioner has right to file reply to the show-cause notice and any order passed, would have been passed after affording an opportunity of hearing to the petitioner under Sections 73, 74 and 75 of the Central Goods and Services Tax Act, 2017. The show-cause notice cannot be made subject matter of the writ petition.
Conclusion
The court while dismissing the writ petition held that the petitioner is free to file reply to the representations and the department are required to act in accordance with law while dealing with the representations.
Case Title: M/s Hero Motocorp Limited Vs UOI
Case No.: D.B. Civil Writ Petition No. 13738/2024
Date: 27/08/2024
Counsel For Petitioner: Senior Advocate S. Ganesh, assisted by Purvi Mathur, Kushagra Sharma, Devashish Marwah
Counsel For Respondent: Sandeep Taneja
