The High Court of Punjab And Haryana held that Show Cause Notice ( SCN ) under section 74 of the Central Goods and Service Tax ( CGST ) Act, 2017 can be issued even if proceedings initiated earlier under section 73 were dropped.
Group M Media India Private Limited , the petitioner challenged the show cause notice issued to him under section 74(1) of the CGST Act, 2017 (‘the Act’) read with section 20 of the IGST Act, 2017.
It was submitted that earlier the respondents had issued notice under section 73 of the Act to the petitioner, and after the reply was filed, the proceedings were dropped by the respondents vide order dated 28.02.2023. With the same regard, the office of the DGGI had also issued notices to the petitioner to which the petitioner had submitted its reply.
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It was stated that while the DGGI was seized with the matter, the notice under section 74 of the Act could not have been issued to the petitioner. Further, argued that the show cause notice issued under section 74 of the Act does not reflect and point out as to what manner of concealment of tax has been done by the petitioner.
As per section 74 of the Act, the show cause notice should point out as to what are the incriminating allegations against the petitioner and as to how the petitioner has attempted a fraud to evade tax, any willful mis-statement to evade tax, or suppression of facts to evade tax.
The division bench of Justice Sanjeev Prakash Sharma and Justice Sanjay Vashisth viewed that the issuance of notice under section 73 of the Act and dropping the same would not prevent the authorities from independently initiating proceedings under section 74 of the Act.
The question raised by the petitioner was with regard to parallel proceedings being conducted by the DGGI and the Haryana State GST Intelligence Unit as well as Assistant Commissioner, CGST. The bench found that while the Assistant Commissioner, CGST issued a letter dated 10.03.2023 to the petitioner requesting him to deposit the tax liability, the office of the DGGI only issued notice seeking certain queries. However, none of the authorities, either of the CGST or the DGGI have proceeded or initiated proceedings under section 74 of the Act.
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It was also evident that the notice under section 74 of the Act has only been issued to the petitioner by the Haryana State Tax ( SGST ), vide its impugned notice dated 03.08.2024. The petitioner instead of filing reply to the show cause notice, directly approached the Court assailing the said show cause notice in the writ petition.
While dismissing the petition, the court held that the proceedings under section 74 of the Act are comprehensively and completely laid down under the provisions of the Act, and cannot hinder the disposal of proceedings not in any manner.
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