"Appellant wasted public money and time of courts": Bombay HC slaps Exemplary Costs of ₹5 Lakh in Writ against GST SCN, Demand [Read Order]

The Bombay High Court recently dismissed a writ petition filed by Viswaat Chemicals Ltd. challenging a Show Cause Notice ( SCN ) issued by the tax authorities under the Central Goods and Services Tax ( CGST ) Act. The court not only dismissed the petition but also imposed exemplary costs of ₹5,00,000 on the petitioner for attempting to bypass the proper legal process.E

The petitioners, Viswaat Chemicals Ltd., argued that the SCN issued on December 7, 2023, was vague and lacked the necessary details to allow them to adequately respond, thus violating the principles of natural justice. They claimed that both the SCN and the subsequent adjudication order dated July 22, 2024, were without legal basis and jurisdiction.

The petitioners requested the court to quash the SCN and the adjudication order under Article 226 of the Constitution of India, arguing that they had been denied a fair opportunity to defend themselves.

The Bench, comprising Justices M.S. Sonak and Jitendra Jain, examined the SCN and found that it contained sufficient material particulars. The court observed that the SCN provided a clear idea of the allegations and case the petitioners were required to address. Furthermore, the petitioners had filed a detailed reply to the SCN on April 18, 2024, which demonstrated their understanding of the case, thereby refuting claims of vagueness.

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The court emphasised that filing writ petitions to challenge Show Cause Notices should not be done routinely unless there is a clear violation of principles of natural justice or the notice is wholly without jurisdiction.

The Bench noted that the petitioners had not raised any substantial grievance regarding the SCN in their initial responses and only brought up the vagueness argument after the adjudication process was completed.

Citing various judgments, including Whirlpool Corporation vs. Registrar of Trade Marks and Special Director vs. Mohd. Ghulam Ghouse, the court reiterated that writ petitions against SCNs should be discouraged unless the notice is completely baseless. The court also referred to several rulings where it was held that statutory remedies, such as appeals, should be exhausted before approaching the High Court. The Bombay High Court dismissed the petition, noting that the petitioners were attempting to delay the adjudication process and avoid the statutory requirement of pre-deposit for appeals. The petitioners were directed to pay ₹5,00,000 to the Maharashtra Legal Services Authority within four weeks as exemplary costs.

To Read the full text of the Order CLICK HERE

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