Shashi Contractors Vs State of U.P. and another

FULL TEXT OF THE JUDGMENT/ORDER OF ALLAHABAD HIGH COURT

1. This writ petition is directed against order dated 25.04.2024 passed under Section 73(9) of the Goods and Services Tax Act, 2017 (for short ‘the Act’) for the tax period April 2018 to March 2019 wherein a demand to the tune of Rs. 3,20,852.68 has been created against the petitioner.

2. The petitioner was issued notice dated 21.11.2023 under Section 61 of the Act inter auia pointing out the discrepancies in the return after scrutiny. No response to the said notice was given which resulted in issuance of notice dated 21.12.2023 under Section 73 of the Act inter auia indicating the discrepancies and calling upon the petitioner to provide explanation and evidence for the differences/discrepancies mentioned therein. When reply to the said notice was not filed, again reminder notices were issued to the petitioner on 01.02.2024 and 21.03.2024 and when despite issuance of reminders, no response was filed, the order impugned dated 25.04.2024 was passed.

3. Learned counsel for the petitioner made submissions that the order impugned is contrary to the requirements of provisions of Section 75(6) of the Act as the same does not contain any reasons in support of the conclusion arrived at and that as notice issued did not indicate the amount of penalty and penalty has been imposed, the same is in violation of provisions of Section 75(7) of the Act and, therefore, the order impugned deserves to be quashed and set aside.

4. Learned counsel for the respondents supported the order impugned. Submissions have been made that once, in response to the notice issued under Section 61 and show cause notice issued under Section 73 of the Act, no response was filed, the authority, after perusing the record, has passed the order impugned which is speaking in nature and in absence of any response, the further consideration was not required.

5. Further submissions have been made that the show cause notice issued under Section 73 of the Act clearly indicates that the penalty as prescribed under the CGST Act, 2017 would be imposed and, therefore, it cannot be said that no notice qua the penalty was issued to the petitioner.

6. We have considered the submissions made by counsel for the parties and have perused the material available on record.

7. Admittedly, despite issuance of notices under Sections 61 and 73 of the Act and reminders, no response was filed by the petitioner. The show cause notice issued was very clear and specific, pointing out the discrepancies and calling upon the petitioner to show cause as to why the tax, penalty and interest as indicated be not imposed. The table at page 38 of the writ petition clearly indicates the amount of interest and the penalty as per CGST Act, 2017 and the amount of tax based on show cause notice. When the response was not filed, the order impugned was passed. In the order, the authority has noticed the allegations made in show cause notice and has clearly reiterated the discrepancies as pointed out in the show cause notice and in absence of any response, has levied the tax as indicated in the show cause notice.

8. Once the response was not filed, the authority was not required to raise probable grounds which the assessee could raise and deal with the same. The authority was required to apply its mind to the show cause notice and substantiate the same with the material available on record and was not required to simply make reference to the notices issued under Sections 61 and 73 of the Act, as laid down by this Court in M/s New Manoj Medical Store Vs. State of U.P. and 2 others, Writ Tax No. 979 of 2025, decided on 12.03.2025. In the present case, the authority has recorded sufficient reasons for coming to the conclusion that the petitioner was liable to pay the tax, penalty and interest.

9. So far as the plea pertaining to failure to indicate the penalty in the show cause notice is concerned, the said plea apparently also has no substance as the notice itself indicates as to why the tax, penalty and interest be not imposed and qua the amount of penalty, it has been indicated that the same would be levied “as per CGST Act, 2017” which fulfills the requirement of Section 75(7) of the Act.

In view of the above discussions, we do not find any reason to interfere with the order impugned. The petition has no substance, the same is, therefore, dismissed.