Relief to Godrej & Boyce: Bombay HC quashes Notice for allegedly availing inadmissible Transitional Credit worth Rs.3.83 Cr [Read Order]

In a major relief to Godrej & Boyce, the Bombay High Court quashed the Show Cause Notice for allegedly availing inadmissible transitional credit worth Rs.3.83 Crores as it has been issued on an erroneous legal premise.

According to the petitioner, Godrej & Boyce Mfg. Co. Ltd. the impugned notice proceeds on the footing that the transitional arrangement for taking Input Tax Credit in the cases of CESS such as Education Cess (E Cess), Secondary & Higher Education Cess (SHE Cess) and Krishi Kalyan Cess (KK Cess) has been taken away by a retrospective amendment. However, the petitioner claims that not only on the date of its issuance but even on the date this writ petition was presented, the amendment(s) referred to in the impugned notice had not come into force and, therefore, the impugned notice has been issued on an untenable legal premise; hence, it is without jurisdiction.

While articulating the point in support of the petitioner’s claim that the impugned notice is non-est in the eye of law, Mr. Hidayatullah, senior counsel on behalf of the petitioner pointed out that Explanation 3 has been inserted in Section 140 of the Central Goods and Services Act, 2017 with effect from July 1, 2017 by Section 28 of the Central Goods and Services (Amendment) Act, 2018.

Mr. Jetly, senior counsel appearing for the respondents opposed the writ petition by contending that the impugned show-cause notice has been issued by an officer who does have the jurisdiction to issue such notice; hence, the petitioner ought to be directed to raise all points that are available to it in defence for consideration of the said officer. It was further contended by him that the point urged by the petitioner that the impugned show cause notice is not founded on any legal premises, is a jurisdictional issue; and such issue can even be urged by it for an adjudication by the respondent.

The division bench headed by Chief Justice Dipankar Dutta and Justice G.S.Kulkarni held that where the impugned show-cause notice suffers from an error going to the root of the jurisdiction of the respondent in assuming jurisdiction and is, accordingly, indefensible and liable to be set aside.

“If the respondent has reason to believe that the action proposed in the show-cause notice could be saved even without the amendments in Explanations 1 and 2 to Section 140 of the CGST Act having been brought into force or on grounds other than the one assigned therein, it shall be at liberty to issue a fresh show- cause notice to the petitioner and if such notice is issued, the petitioner will be free to respond to the same and take all possible defences available to it in law,” the court said.

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