The Himachal Pradesh High Court dismissed Himalaya Wellness Company’s challenge to a 15-page show cause notice (SCN) issued under GST rules. The SCN sought to collect ₹4.37 crores in allegedly inadmissible input tax credit (ITC).
The Division Bench of Justice Tarlok Singh Chauhan and Justice Sushil Kukreja opined that acceptance of a show cause notice (SCN) per se does not signify that the notice was one prejudiced in or in defiance of principles of natural justice.
As the proceedings remain at the phase of giving a notice, the court discovered that it will be premature for the court to acknowledge a writ petition under Article 226 of the Constitution.
Himalaya Wellness Company, a partnership firm governed by the Indian Partnership Act, 1932, distributes personal care and pharmaceutical products such as medicaments, cosmetics, shampoos, soaps, and oral hygiene items. The company has employed the services of Goods Transport Agencies (GTAs) to transport goods into and out of Himachal Pradesh.
GST is to be imposed on the GTA services under Reverse Charge vide Notification No. 11/2017-Central Tax (Rate) dated 28.06.2017 and Notification No. 03/2022-Central Tax (Rate) dated 13.07.2022. The company said that it received ITC on the GST paid and has released GST payable on the taken service.
An audit was performed by the Central Tax Department of the company, and an audit enquiry notice was issued with some discrepancies cited therein. The company answered with a detailed response, including documents, though by issuing the final audit report, its explanation was rejected without accepting the same, terming the response as untenable.
A notice in DRC-01A has been sent by the department on 21.05.2024 asking for Rs 4,37,17,830 under penalty and interest by 31.05.2024. On 30.05.2024 the company refused any tax liable to get paid.
Despite the objections raised, a show cause notice was issued proposing the recovery of ₹4,36,75,439 in inadmissible Input Tax Credit (ITC), ₹27,446 in short-paid GST, and ₹14,945 as interest, along with applicable penalties under the CGST Act. The notice also proposed adjusting ₹6,85,440, which had been prepaid by the company, against the total demand.
Thereafter, the company against the SCN has approached the high court. The department answered that the writ petitions for the simple notice are unsustainable, as the case shall be determined under the natural justice.
The court, the SCN, has the information to explain its issuance, and interfering at the same point shall be interrupting another lawful administrative procedure in its tracks. As per that, the petition was rejected.
Read Also: Uttarakhand HC Quashes GST Order for Exceeding Show Cause Notice Amount
This decision validates that the courts do not interfere in the phase of notice in tax cases until any factual proof of legal or constitutional breaches is there.
| Case Title | M/s Himalaya Wellness Company vs. Union of India & Ors |
| Case No.: | CWP No. 9239 of 2024 |
| For The Petitioner | Mr. G. Shivadass, Ms.Shradha Rajgiri, Mr. Vipul Sharda and Mr. Raditya Katoch |
| For The Respondents | Mr. Janak Raj, Mr. Vijay Kumar Arora, Ms. Godawari, Ms. Lalita Sharma, Ms. Aastha Kohli, Mr. Hitansh Raj and Mr. Gaurav Kumar |
| Himachal Pradesh High Court | Read Order |
