GST Show Cause Notice Challenged due to non consideratsion of reply of pre-consultation notice ; Adjudication Allowed to Proceed with Interim Relief

Issue: Whether a show cause notice issued under the GST Act is valid when it is issued after the assessee has already filed a reply to a pre-consultation notice, without considering the reply.

Facts:

A pre-consultation notice in Form GST DRC-01A was issued to the assessee.
The assessee requested 10 days to respond, which was neither accepted nor rejected by the department.
The assessee filed their reply on the 10th day.
Subsequently, a show cause notice was issued.
The assessee challenged the show cause notice, arguing that it should not have been issued without considering their reply to the pre-consultation notice.

Decision:

The court acknowledged the assessee’s concern regarding the procedural irregularity.
The court allowed the authorities to proceed with the adjudication of the show cause notice.
However, as an interim relief, the court directed that no final adjudication order should be passed until further orders from the court.

Key Takeaways:

This case highlights the importance of following proper procedure in GST proceedings, particularly when issuing show cause notices after pre-consultation notices.
The court recognized the potential issue of the show cause notice being issued without considering the assessee’s reply to the pre-consultation notice.
The interim relief granted by the court prevents any immediate adverse impact on the assessee while the matter is under consideration.
This decision ensures that the assessee’s rights are protected and that the adjudication process is conducted fairly, taking into account their response to the pre-consultation notice.

HIGH COURT OF BOMBAY

FSM Education Pvt Ltd

Union of India

B.P. COLABAWALLA and FIRDOSH P. POONIWALLA, JJ.

WRIT PETITION (L) NO.28229 OF 2024

JANUARY 21, 2025

Cyrus Ardeshir, Senior Counsel, Jamshed Master and Natasha Bhot, Advs. for the Petitioner. Ms. Niyati Mankad, Adv. for the Respondent.

ORDER

1. The issue in the above Writ Petition is regarding whether a show cause notice could have been issued without taking into consideration the reply filed by the Petitioner to the pre-consultation notice issued to the Petitioner under Rule 142 (1A) of the Central Goods and Services Rules, 2017. Rule 142 (1A) was brought on the statute book on 9^th October 2019 and underwent an amendment on 15^th October 2020.

2. In the present case, it is the case of the Petitioner that the pre-consultation notice was issued to the Petitioner in FORM GST DRC-01A on 11^th July 2024. By this notice, the Petitioner was called upon to file a reply by 22^nd July 2024. Since the pre-consultation notice referred to a calculation sheet, and which was not annexed to the said notice, the Petitioner on 13^th July 2024 addressed an e-mail to the Revenue Authorities seeking a copy of the calculation sheet. On 19^th July 2024 the Revenue Authorities, via their e-mail forwarded the aforesaid calculations. After receipt of the calculations, the Petitioner, on the very same day, by their e-mail dated 19^th July 2024, sought 10 days time to respond to the pre-consultation notice. It is the case of the Petitioner that the Respondent Authorities did not respond or reject the aforesaid request. Accordingly on 29^th July 2024 (i.e. the 10^th day) the Petitioner responded to the pre-consultation notice vide their e-mails dated 29^th July 2024 at 5.07 p.m. and 5.09 p.m. A hard copy of the aforesaid reply was also furnished to the Respondent Authorities on 30^th July 2024. It is the case of the Petitioner that despite this, a show cause notice was issued to the Petitioner dated 29^th July 2024, and which was forwarded by e-mail to the Petitioner only at 5.02 p.m. on 30^th July 2024. The case of the Petitioner is therefore that once the reply to the pre-consultation notice was already with the Authorities, the show cause notice could not have been issued without taking into consideration their reply. This is a long and short of the dispute in the present Writ Petition.

3. The learned advocate appearing on behalf of the Respondents sought time to file an affidavit-in-reply to the above Writ Petition. Acceding to her request, we direct that the reply, if any, shall be filed on or before 4^th February 2025 and a copy of the same shall be served on the advocates for the Petitioner.

4. We now place the above matter for admission on 11^th February 2025.

5. At this stage, Mr.Ardeshir, the learned senior counsel appearing on behalf of the Petitioner submitted that the next hearing on the show cause notice is fixed on 27^th January 2025, and if the hearing proceeds and an adjudication order is passed, this Petition would be rendered infructuous.

6. We have heard Mr.Ardeshir on this limited aspect. We are not inclined to stay the hearings that have been fixed on the show cause notice. We, therefore, direct that though the hearings can proceed, the concerned Authority shall not pass any adjudication order on the said show cause notice until further orders.

7. Stand over to 11^th February 2025.

8. This order will be digitally signed by the Private Secretary/Personal Assistant of this Court. All concerned will act on production by fax or email of a digitallyx`1 signed copy of this order.