The Punjab & Haryana High Court has held that the allegations in the show cause notice have been made concerning availing of excess Input Tax Credit (ITC) by the applicant company as per tables 8A and 8D of its GST returns. Still, the ground for arriving at such a conclusion is not discovered in the show-cause notice.
Serious flaws in the issuance of the notice have been discovered by the bench of Justice Deepak Sibal and Justice Lapita Banerji. The notice put reliance on a CAG audit of the applicant; it was mentioned by the State that no such audit had been performed. Instead, the audit directed to was of the GST department itself, rendering the premise of the notice factually wrong.
The case has arrived from a writ petition contesting an SCN on January 31, 2024. The notice had been issued u/s 73(1) of the Punjab Goods and Services Tax (PGST) Act, 2017, read with provisions of the Central Goods and Services Tax (CGST) Act and Integrated Goods and Services Tax (IGST) Act.
The notice alleged multiple discrepancies, along with an excess claim of the ITC, a mismatch between GST returns, short payment of tax under the reverse charge mechanism, and undischarged tax liabilities. Such allegations were purportedly grounded on a special audit performed by the Comptroller and Auditor General (CAG) of India.
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The Court stated that the audit report, which is the only basis of the notice, was never furnished to the applicant. This makes the entity denied a fair chance to answer.
The Bench held that the notice was vague and did not have the required particulars. While it alleged excess ITC and mismatches in returns, it failed to reveal the methodology or grounds for these conclusions. Likewise, claims of unreleased tax obligation and short payment under reverse charge do not have any supporting information.
Outlining the significance of clarity in tax proceedings, the court specified that an SCN should allow the taxpayer to answer. A vague notice cites that it defeats this purpose and becomes a mere formality.
Authorities under section 73(3) of the CGST Act should furnish the detailed information of tax shortfalls or incorrect ITC claims, the court emphasised. Failure to perform the same makes the notice legally unsustainable.
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HC quashed the impugned SCN. It granted liberty to the tax authorities to start fresh proceedings as per the law, given that due process is followed.
| Case Title | Abbott Healthcare Private Limited V/S Excise and Taxation Commissioner, Punjab and Ors. |
| Case NO. | CWP-4495-2024 |
| Counsel For Petitioner | Mr Bharat Raichandani, Advocate Mr Rana Gurtej Singh, Advocate and Mr Marmilk Kamdar, Advocate |
| Counsel For Respondent | Mr Sourabh Kapoor, Addl. A. G., Punjab, Mr Brijesh Mittal, Advocate (through V.C) and Mr Simranpreet Singh, Advocate |
| Punjab & Haryana High Court | Read Order |
