Huida Sanitaryware India (P) Limited Vs Deputy Commissioner of Central Tax

FULL TEXT OF THE JUDGMENT/ORDER OF KARNATAKA HIGH COURT

In this petition, petitioner seeks the following reliefs:

a) Set aside / quash the impugned show cause notice dated 15.09.2022 issued by the 1st respondent under section 122 of the GST Act in SCN No. 06/2022-23/GST/AE-1 (DIN-20220957YU00006176C6 2530) as per Annexure-C by issuing a Writ of Certiorari or any other order or writ in the nature of a Writ of Certiorari and consequently quash the entire proceedings.

b) To grant any other relief/(s) this Hon’ble Court deems fit and proper in the facts and circumstances of the case.

2. Heard learned counsel for the petitioner and learned counsel for the respondents and perused the material on record.

3. A perusal of the material on record will indicate that on 11.08.2020, Karnataka State GST Authorities initiated proceedings by invoking Section 70 of the KGST Act against the petitioner, which ultimately culminated in the adjudication order dated 09.11.2022 under Section 73(1) of the KGST Act. In the meanwhile, respondent Nos.1 and 2/CGST Authorities also initiated penalty proceedings under Section 122 of the CGST Act in relation to the very same subject matter comprising of the transactions between the petitioner and one M/s. Crystal Hardware.

4. It is the specific contention of the petitioner that apart from the fact that the proceedings initiated by the CGST authorities after initiation of the proceedings by the Karnataka State GST Authorities in the very same subject matter, is barred under Section 6 (2) (b) of the CGST Act, penalty proceedings under Section 122 of the CGST Act are also barred by virtue of Section 74 of the CGST Act. It is therefore submitted that the impugned show cause notice and further proceedings pursuant thereto deserves to be quashed.

5. Per contra, learned counsel for the respondent supports the impugned order and submits that proceedings initiated by the CGST Authorities and State Government GST Authorities are different and the question of quashing Show Cause Notice does not arise and submits that there is no merit in the petition and the same is liable to be dismissed.

6. A perusal of the material on record in particular Annexure-C dated 15.09.2022 issued by CGST authorities and adjudication order dated 09.11.2022 at Annexure-D is sufficient to come to the conclusion that the both relates to the same subject matter in relation to the transaction between petitioner and M/s Crystal Hardware.

7. In this context, it is relevant to extract Section 6 of the CGST which reads as under.

“Section 6 – Authorisation of officers of State tax or Union territory tax as proper officer in certain circumstances 2

(1) Without prejudice to the provisions of this Act, the officers appointed under the State Goods and Services Tax Act or the Union Territory Goods and Services Tax Act are authorised to be the proper officers for the purposes of this Act, subject to such conditions as the Government shall, on the recommendations of the Council, by notification, specify.

(2) Subject to the conditions specified in the notification issued under sub-section (1),––

(a) where any proper officer issues an order under this Act, he shall also issue an order under the State Goods and Services Tax Act or the Union Territory Goods and Services Tax Act, as authorised by the State Goods and Services Tax Act or the Union Territory Goods and Services Tax Act, as the case may be, under intimation to the jurisdictional officer of State tax or Union territory tax;

(b) where a proper officer under the State Goods and Services Tax Act or the Union Territory Goods and Services Tax Act has initiated any proceedings on a subject matter, no proceedings shall be initiated by the proper officer under this Act on the same subject matter.

(3) Any proceedings for rectification, appeal and revision, wherever applicable, of any order passed by an officer appointed under this Act shall not lie before an officer appointed under the State Goods and Services Tax Act or the Union Territory Goods and Services Tax Act.”

8. A plain reading of the aforesaid provision will indicate that when once proceedings have been initiated under KGST Act which culminated in the adjudication order, parallel/dual proceedings under CGST Act sought to be initiated by issuing Show Cause Notice under Section 122 of the CGST Act, are clearly barred and impermissible in law and impugned Show Cause Notice deserves to be quashed on this ground alone.

9. It is also relevant to note Section 74(11) of the CGST Act, which reads as under:

“74 (11) Where any person served with an order issued under sub-section (9) pays the tax along with interest payable thereon under section 50 and a penalty equivalent to fifty per cent. of such tax within thirty days of communication of the order, all proceedings in respect of the said notice shall be deemed to be concluded.

Explanation 1.—For the purposes of section 73 and this section,—

(i) the expression ―all proceedings in respect of the said notice shall not include proceedings under section 132;

(ii) where the notice under the same proceedings is issued to the main person liable to pay tax and some other persons, and such proceedings against the main person have been concluded under section 73 or section 74, the proceedings against all the persons liable to pay penalty under sections 122, 125, 129 and 130 are deemed to be concluded.

Explanation 2.––For the purposes of this Act, the expression ―suppression shall mean non-declaration of facts or information which a taxable person is required to declare in the return, statement, report or any other document furnished under this Act or the rules made thereunder, or failure to furnish any information on being asked for, in writing, by the proper officer.”

10. The aforesaid explanation No.1 clearly indicates that once proceedings are initiated under Sections 73 or 74, penalty proceedings under Section 122 are deemed to have been concluded and on this ground also, the impugned Show Cause Notice which purports under Section 122 of the CGST Act is clearly illegal and arbitrary and without jurisdiction or authority of law and contrary to the aforesaid provisions of law, warranting interference by this Court.

11. In the result, I pass the following:

ORDER  

i) The Writ Petition is hereby allowed.

ii) The impugned show cause notice dated 15.09.2022 issued by respondent No.1 at Annexure-C is hereby quashed.