The Rajasthan High Court in a recent ruling held that the writ jurisdiction of the High Court cannot be invoked for challenging GST Show-Cause Notices.
In this case, the petitioner, M/s Hero Motocorp Limited, a manufacturer, filed a writ petition challenging a show-cause notice issued under the Central Goods and Services Tax (CGST) Act, 2017, demanding payment of GST at 28% which is an increase from the 18% previously levied rate.
It was submitted that from 2017, the petitioner along with other similarly situated manufacturers have been paying GST at the rate of 18% but through the show-cause notice (SCN) dated 03.08.2024, the respondents demanded a payment of 28% GST.
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It should be noted that the company’s business will be severely hampered by this additional 10% GST fee, which would require the payment of thousands of crores in taxes.
The council for the petitioner contended that this change would severely impact its business, leading to closure as similarly situated manufacturers were not issued such notices and thus similarly situated counterparts would get the benefit.
The counsel for the petitioner further contended that before issuing the notice, the respondents did not refer the matter to the GST Council or seek an advance ruling, as required by the Central Board of Indirect Taxes and Customs (CBIC) circulars.
The counsel on behalf of the respondent contended that through the way of a writ petition, a Show Cause Notice cannot be challenged. The counsel, Mr. Sandeep Pathak further submitted that the right available to the petitioner is to file a reply to the show-cause notice, and any order passed would have been passed after affording an opportunity of hearing to the petitioner under Sections 73, 74, and 75 of the Central Goods and Services Tax Act, 2017.
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The High Court bench comprising Justice Ganesh Ram Meena and Justice Pankaj Bhandari was of the view that writ jurisdiction cannot be invoked to challenge an SCN as the petitioner has the right to file a reply to the show-cause notice according to the CGST Act and held that any order passed by the authorities is appealable.
The writ petition was dismissed by the High Court, but it was held that the petitioner was free to reply to the notice and that the authorities had to act in accordance with law while dealing with the representations.
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