Kerala High Court
Puthuparambil Shereef Shanavas vs State Tax Officer on 11 April, 2024
Author: A.K.Jayasankaran Nambiar
Bench: A.K.Jayasankaran Nambiar
IN THE HIGH COURT OF KERALA AT ERNAKULAM
PRESENT
THE HONOURABLE DR. JUSTICE A.K.JAYASANKARAN NAMBIAR
&
THE HONOURABLE MR. JUSTICE SYAM KUMAR V.M.
THURSDAY, THE 11TH DAY OF APRIL 2024 / 22ND CHAITHRA, 1946
WA NO. 497 OF 2024
AGAINST THE JUDGMENT DATED 15.02.2024 IN WP(C) NO.3970 OF 2024 OF
HIGH COURT OF KERALA
APPELLANT/PETITIONER:
PUTHUPARAMBIL SHEREEF SHANAVAS
AGED 40 YEARS
PROPRIETOR, GREAT WOOD PLY AND BOARDS, KOONAM ROAD,
KURUMATHUR, KANNUR DISTRICT, PIN - 670142
BY ADV RAJESH NAMBIAR
RESPONDENTS/RESPONDENTS:
1 STATE TAX OFFICER
STATE GOODS AND SERVICE TAX DEPARTMENT, TAX PAYER
SEREVICE CIRCLE, TALIPARAMBA, PIN - 670141
2 JOINT COMMISSIONER
STATE GOODS AND SERVICE TAX DEPARTMENT, KANNUR, PIN -
670002
3 STATE OF KEREALA
REPRESENTED BY SECRETARY TO GOVERNMENT, TAXES
DEPARTMENT, SECRETARIAT, THIRUVANANTHAPURAM,
PIN - 695001
BY SR GOVT.PLEADER SRI.V.K SHAMSUDHEEN
THIS WRIT APPEAL HAVING COME UP FOR ADMISSION ON
11.04.2024, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:
:2:
WA No.497 of 2024
JUDGMENT
Dr. A.K.Jayasankaran Nambiar, J.
This Writ Appeal is preferred against the judgment dated 15.02.2024 of the learned Single Judge in WP(C). No.3970 of 2024.
2. The brief facts necessary for the disposal of the Writ appeal are as follows:
The appellant herein had preferred the Writ Petition seeking to quash the intimation issued to him blocking his input tax credit. It is clear from the facts averred in the writ petition that while the intimation regarding the blocking of credit was received by the appellant as early as on 19.06.2023, other than sending a reply to the said notice, the appellant did not move this Court through any Writ Petition alleging non-compliance with the provisions of Clause 3.1.4 of the CBEC Circular dated 02.11.2021, which provided for a transparent and non-mechanical manner by which the discretion given to the statutory authority under Rule 86A of the GST Rules, 2017 was to be exercised. While so, by 17.10.2023, the appellant was served with a show cause notice under Section 74(1) of the CGST Act, 2017 (Ext.P6), :3: WA No.497 of 2024 and in the said notice the reasons that informed the exercise of discretion under Rule 86A of the GST Rules were furnished to the appellant. It was more than three months thereafter that the appellant approached the writ court questioning the legality of Ext.P2 intimation issued to him regarding the blocking of input tax credit.
3. The learned Single Judge after considering the provisions of Rule 86A of the GST Rules rightly found that there was no jurisdictional error with regard to the issuance of the intimation more so when the reasons that weighed with the Department to issue the intimation notice were mentioned in Ext.P6 and P7 show cause notices that were issued shortly thereafter. Although the learned counsel for the appellant would vehemently contend that merely because Exts.P6 and P7 show cause notices were subsequently issued it does not take away from the inherent illegality that informed the issuance of Ext.P2 intimation, we are not impressed with the said contention. Clause 3.4.1 of the Circular only contains a guideline with regard to the manner in which the discretion under Section 86A of the GST Rules is to be exercised by the proper officer. It mandates that the discretion therein cannot be exercised in a mechanical manner and the remedy of disallowing debit of amount from the electronic credit ledger has to be resorted to with utmost circumspection and with maximum care and caution. It further mandates that there must be an objective :4: WA No.497 of 2024 determination based on intelligent care and evaluation as distinguished from a purely subjective consideration of suspicion, and that the reasons are to be on the basis of material evidence available or gathered in relation to fraudulent availment of input tax credit or ineligible input tax credit availed as contemplated in Rule 86A of the GST Rules.
On the facts of the instant case, we find from a perusal of Exts.P6 and P7 notices that were subsequently issued to the appellant that the Department was of the view that input credit was being availed on the basis of bogus invoices and it was this suspicion, based on materials gathered by the Department, that prompted the Department to issue Ext.P2 intimation so as to prevent the irregular availment of input tax credit by the appellant. While the appellant may have had a case to approach the writ court if there was any inordinate delay occasioned by the respondents in issuing the show cause notices, we find that the appellant had chosen not to approach this Court during the period between the receipt of intimation and the receipt of Ext.P6 and P7 show cause notices. On the contrary, the appellant chose to approach the writ court much later, in January 2024, more than three months after the receipt of Ext.P6 and P7 show cause notices. Under the said circumstances, we are of the view that the learned Single Judge was correct in relegating the appellant to his alternate remedy of :5: WA No.497 of 2024 replying to the show cause notices and getting the matter adjudicated by the adjudicating authority under the statute. As rightly observed by the learned Single Judge, this is not a case that warrants a belated interference with Ext.P2 intimation, by this Court under Article 226 of the Constitution of India. The Writ Appeal fails and is accordingly dismissed.
Sd/-
DR. A.K.JAYASANKARAN NAMBIAR JUDGE Sd/-
SYAM KUMAR V.M. JUDGE mns