While considering a petition challenging the show cause notice by the GST department has held that the same is premature since the appeal relating to claim of refund is still under process.
The principal plea of the petitioner is that a show-cause notice (SCN) issued earlier i.e., SCN dated 08.02.2021, has already been adjudicated by the concerned authority, via the order dated 12.05.2022 wherein the refund claim lodged by the petitioner was rejected. The adjudicating authority concluded that the refund was founded on forged input tax credit claim and the same had to be rejected.
Mr Seth, appearing on behalf of the petitioners contended that an appeal has been lodged against the adjudication order.
Ms Ayushi Bansal, who appears on behalf of the respondent, affirms the aforesaid position i.e., the fact that the adjudication order has been passed and an appeal has been lodged by the petitioner before the concerned appellate authority.
A bench of Justice Rajiv Shakdher and Justice Tara Vitasta Ganju observed that once the petitioner’s refund claim was rejected on the ground that it was founded on forged ITC, the petitioner would be liable to pay tax, interest and perhaps also penalty, in the event the adjudication order is sustained.
“The fact that an appeal has been preferred by the petitioner, which is pending adjudication, persuades us to hold that, at this stage, the impugned show-cause notice is premature. In the event the appeal were to be dismissed, it would then be open to the respondent/revenue to take recourse to Section 75 of the Act and the attendant rules framed thereunder,” the Court said.
Disposing the petition, the High Court held that “therefore, the impugned demand notice dated 14.06.2022 is set aside, with liberty to the respondent to trigger the process under Section 75 of the Act and the attendant rules, once clarity is attained with regard to the outcome of the pending appeal lodged by the petitioner.”
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