In MAT 1185 of 2023 -CAL HC- Calcutta High Court upholds validity of GST Show Cause Notice issued to M/s. Geeta Ganesh Promoters Private Limited
Chief Justice T.S. Sivagnanam & Justice Hiranmay Bhattacharyya [11-08-2023]

Read Order: M/s. Geeta Ganesh Promoters Private Limited v. Union of India & Ors

Chahat Varma

New Delhi, August 23, 2023: The Division Bench of the Calcutta High Court has upheld the decision of the Single Bench, stating that the Single Bench had correctly declined to interdict the show cause notice issued to M/s. Geeta Ganesh Promoters Private Limited (appellant) by the GST department.

The present intra-Court appeal was filed by the appellant in response to the order dated 23rd June 2023. The original writ petition had sought a declaration that Rule 42(3) of the Central Goods and Services Tax Rules, 2017 (CGST Rules) was unconstitutional. Additionally, the appellant had contested a show cause notice issued under Section 73 of the West Bengal Goods and Services Tax Act (WBGST Act). The Single Bench had entertained the writ petition only concerning the challenge to the constitutionality of Rule 42(3) of the CGST Rules. However, regarding the challenge against the show cause notice, the Single Bench declined to intervene and instructed the appellant to file an appeal instead. The main argument put forth by the appellant was that the show cause notice lacked clarity, specificity, a proper reason, a valid signature, and necessary details.

The division bench comprising of Chief Justice T.S. Sivagnanam and Justice Hiranmay Bhattacharyya observed that the notice provided specific demand details and identified the Deputy Commissioner responsible for issuing it. Moreover, the show cause notice adhered to the statutory format and was sent to the appellant’s registered email address. Additionally, a report dated 8th May 2023, was attached to the show cause notice, preceding its issuance. This report, along with form GST DRC-01A, had advised the appellant to pay the determined tax and interest by 5th May 2023, warning that non-compliance would lead to a subsequent show cause notice.

After evaluating the attached report, the bench concluded that it explicitly required the appellant to justify why the specified amount in the report's table, alongside interest and penalties, should not be paid. The bench remarked that the appellant should consider the attached annexure to the notice, as the essential information upon which they were expected to present their reasons for contesting the recovery of the computed tax, alongside the associated interest and penalties.

Thus, the division bench was fully convinced that the show cause notice was not vague or lacking in specificity and consequently, the appellant’s appeal was dismissed by the Court.