This petition challenges a show cause notice issued by the authorities under GST law. The petitioner contended that the notice was based on statements recorded before an official inquiry and under the pre-GST regime, rendering them invalid as evidence. The Court, relying on several Supreme Court judgments, declined to interfere at this stage, directing the petitioner to raise these objections in reply to the show cause notice and to exhaust alternative remedies, including appeal if necessary.

Para 2: Show Cause Notice Issued

• The challenge relates to a show cause notice issued on April 5, 2024, by the GST authorities.

Para 3: Petitioner’s Argument

• Mr. Hidayatullah, counsel for the petitioner, argued that the notice was based primarily on statements recorded before the GST regime (2018-2019) and not during an official inquiry or proceeding under the CGST Act.
• He cited a prior case (Prakash Raghunath Autade v. Union of India) to argue that such pre-notice statements cannot be considered valid evidence and urged the Court to set aside the notice.

Para 5: Respondent’s Argument

• Mr. Mishra, representing the respondents, stated that the notice was not solely based on these statements but on other materials gathered during the investigation. He argued that the petitioner should respond to the show cause notice and raise all relevant objections during the adjudication.

Para 9-11: Court’s Observations on Jurisdiction

• The Court clarified that it typically does not interfere with show cause notices unless there is an absence of jurisdiction or violation of fundamental rights, as outlined in the Whirlpool Corporation case.
• In this case, there was no ex-facie lack of jurisdiction or violation of natural justice, so interference at this stage was not justified.

Para 12-14: Precedents Against Interference

• The Court referred to several cases (Union of India v. Coastal Container Transporters, Malladi Drugs & Pharma Ltd. v. Union of India) where the Supreme Court had discouraged interference with show cause notices, except in exceptional cases, and advised petitioners to exhaust all remedies under the law.

Para 15-17: Petitioner’s Reliance on Precedent

• The Court analyzed the petitioner’s reliance on the Prakash Raghunath Autade case and found it inapplicable since that case dealt with the right to cross-examine witnesses whose statements were referred to before adjudication.
• The Court held that the petitioner could still raise all permissible defenses during the adjudication process but saw no ground for setting aside the notice at this stage.

Para 19: Time Granted

• The petitioner was granted eight weeks to reply to the show cause notice, and the period of litigation was excluded from the limitation period for the adjudication.

Para 20-21: Conclusion

• The petition was dismissed with the liberty to the petitioner to raise all permissible defenses in the reply to the show cause notice, emphasizing the need for the adjudicating authority to consider such defenses in accordance with the law.

Acts & Sections Discussed:

• Central Goods and Services Tax Act (CGST Act): Notably relevant, although the specific sections of the Act weren't mentioned.
• Whirlpool Corporation v. Registrar of Trade Marks, Mumbai & Ors. (1998) 8 SCC 1: Criteria for interfering with show cause notices.
• Special Director v. Mohd. Ghulam Ghouse (2004) 3 SCC 440: Guidance on the non-interference with show cause notices unless jurisdictional issues arise.
• Union of India & Ors. v. Coastal Container Transporters Association & Ors. (2019) 20 SCC 446: On not quashing show cause notices where alternative remedies exist.
• Malladi Drugs & Pharma Ltd. v. Union of India (2020) 12 SCC 808: Court refusal to entertain writ petitions against mere show cause notices.

Ratio Decidendi:

The Court reiterated that show cause notices should not be interfered with unless there is a clear case of lack of jurisdiction or violation of natural justice. In this case, the petitioner had the opportunity to raise all objections in the adjudication process, and the Court declined to entertain the writ petition prematurely.

Subjects:

GST, Show Cause Notice, Jurisdiction, Pre-GST Statements, Legal Adjudication

GST Law, Show Cause Notice, Pre-GST Regime, Judicial Interference, Writ Petition, Natural Justice, Adjudication