In a recent verdict, the Madhya Pradesh High Court nullified a show cause notice and order of demand issued against Raymond Limited, asserting that a minimum of 30 days is imperative to provide a ‘reasonable opportunity’ for the respondent to respond, aligning with Section 73 of the Central Goods and Services Tax Act.
The Division Bench of Justice Sheel Nagu and Justice Amar Nath, acknowledging the absence of a stipulated response time in Section 73, underscores the statutory intent of allowing a ‘reasonable opportunity’ for a response, typically interpreted as a minimum of 15 days. Moreover, the court aligns the response period with Section 73(8) of the CGST Act, granting 30 days for payment after the issuance of a show cause notice.
The Section 73 of the Central Goods and Services Act deals with the determination of tax discrepancies, excluding fraud or intentional misstatements. The court criticizes the short interval between the show cause notice (03.09.2022) and the demand order (12.09.2022), deeming it insufficient for a ‘reasonable opportunity.’
Furthermore, the court noted the inadequacy of material particulars in the show cause notice, emphasizing that such documents should withstand judicial scrutiny by providing sufficient foundational material for a prima facie view.
In a significant move, the Madhya Pradesh High Court imposed a Rs 10,000/- cost on the respondent authorities and mandated a compliance report within 60 days. Failure to comply will result in the matter being listed for execution under the caption of “Direction” as PUD. The court’s prior restriction on coercive steps against Raymond, issued on 01.12.2022, remains intact.
The concluding decision allows Raymond to set aside the impugned show cause notice and order of demand, offering the Revenue the option to issue a fresh, legally valid notice, provided it affords a reasonable and sufficient opportunity for the petitioner to be heard.
Advocates Gopal Mundhra, Ginita Badhani, and Rohan Harne represented Raymond Limited, while Advocate Darshan Soni represented the respondent tax authorities.
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