A division bench of the Calcutta High Court has recently quashed the Goods and Services Tax proceedings against the assessee, Joyous Blocks & Panels Private Limited for procedural flaws in issuance of Show Cause Notice and unnecessary rebuttal of assessee.
The appellants had challenged a show cause notice issued by the authority dated 26th September, 2022 with regard to classification of the product manufactured by the appellants.
The preliminary ground on which the show cause notice was challenged is by contending that the authority has pre-decided the issue and the show cause notice is premeditated and it is not a show cause notice and consequently no useful purpose would be served in giving reply by the appellants.
The Single Bench was of the view that a writ against a show cause notice is not maintainable. Challenging the said order the appellants have preferred the instant intra-court appeal.
The Bench of Justices T S Sivagnanam and Hiranmay Bhattacharya made it clear that, “If a show cause notice suffers from the vice of lack of jurisdiction, Courts are entitled to interfere with the same. If the show cause notice is an order by itself and not a show cause notice and it is premeditated then the Courts are entitled to interfere with the said order.”
A query was raised by the officer by proceedings dated 8th July, 2022 calling upon the appellants to state as to why HSN Code of Concrete Masonry Units-AAAC Blocks will not fall under the broad heading 6810 with applicable GST rate of 18% as the appellants are not making fly ash blocks/bricks as per the standard mentioned in BIS Product Code.
The appellants had submitted an elaborate reply for such a query and the authority while issuing the show cause notice has dealt with the reply under the heading “Rebuttal on the factual points” and proceeded to reject all the contentions which were raised by the appellants.
On going through the proceedings, to the court, it appeared to be an order and the manner of issuing show cause notice has not been rightly understood by the authority. It was also noted by the court that the issue could have been averted if the assessee had restricted their reply only to the extent of the query raised.
The court further opined that the entire proceedings have to be redone in an opposite manner, while observing that, “The manner in which the authority has proceeded to issue the notice dated 26th September, 2022 does not satisfy the legal requirements.”
The impugned show cause notice was thereby quashed by the Calcutta High Court, along with the proceedings and the matter was reverted to the file of the Assessing Officer.
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