Karnataka High Court
M/S. Karthik Agro Industries Private ... vs Union Of India on 15 April, 2024
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NC: 2024:KHC-D:6369
WP No. 100999 of 2024
IN THE HIGH COURT OF KARNATAKA, DHARWAD BENCH
DATED THIS THE 15TH DAY OF APRIL, 2024
BEFORE
THE HON'BLE MRS. JUSTICE M.G.UMA
WRIT PETITION NO.100999/2024(T-RES)
BETWEEN:
M/S. KARTHIK AGRO INDUSTRIES PRIVATE LIMITED,
(A PRIVATE LIMITED COMPANY INCORPORATED
UNDER THE COMPANIES ACT, 1956),
REPRESENTED BY ITS EXECUTIVE DIRECTOR,
SRI KARTHIK L. MASHYAL,
WALI BUILDING, BADAMI ROAD,
BEHIND RAILWAY STATION,
BAGALKOT - 587 101.
...PETITIONER
(BY SRI RAGHAVENDRA B. HANJER, ADVOCATE)
AND:
1. UNION OF INDIA,
REPRESENTED BY ITS SECRETARY,
MINISTRY OF FINANCE,
DEPARTMET OF REVENUE,
Digitally
NORTH BLOCK, RASHTRAPATI BHAWAN,
signed by
MANJANNA E DEFENCE HEAD QUARTERS,
Location:
High Court of
NEW DELI - 110 001.
Karnataka
2. THE CENTRAL BOARD OF INDIRECT
TAXES AND CUSTOMS,
REPRESENTED BY ITS CHAIRMAN
HAVING ITS OFFICE AT NORTH BLOCK,
RASHTRAPATI BHAWAN DEFENCE
HEAD QUARTERS, NEW DELI - 110 001.
3. THE GOODS AND SERVICE TAX COUNCIL,
5TH FLOOR, TOWER II,
JEEVAN BHARTI BUILDING,
JANPATH ROAD, CONNAUGHT PLACE,
NEW DELHI - 110 001.
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WP No. 100999 of 2024
4. STATE OF KARNATAKA,
REPRESENTED BY ITS SECRETARY,
MINISTRY OF REVENUE, VIDHANA SOUDHA,
AMBEDKAR VEEDHI,
BANGALORE - 560 001.
5. THE COMMISSIONER OF COMMERCIAL TAXES,
VANIJAY THERIGE KARYALAYA,
1ST MAIN, GANDHINAGAR,
BANGALORE - 560 009.
6. THE DEPUTY COMMISSIONER OF
COMMERCIAL TAXES,
(AUDIT-1) BELAGAVI, SUMOULYA SOUDHA,
3RD FLOOR, CLUB ROAD,
BELAGAVI - 583 201.
7. M/S. KARNATAKA STATE BEVERAGES
CORPORATION LIMITED,
REPRESENTED BY ITS MANAGING DIRECTOR,
4TH FLOOR, TTMC 'A' BLOCK BMTC BUILDING,
KH ROAD, SHANTINAGAR,
BANGALORE - 560 027.
...RESPONDENTS
(BY SRI M.B.KANAVI, ADVOCATE FOR R1;
SRI GIRISH HULMANI, ADVOCATE FOR R2 AND R3;
SRI P.N.HATTI, HCGP FOR R4 TO R6)
THIS WP IS FILED UNDER ARTICLES 226 AND 227 OF THE
CONSTITUTION OF INDIA, PRAYING TO, ISSUE A WRIT OR ORDER
OR DIRECTION IN THE NATURE OF WRIT OF CERTIORARI BY
QUASHING THE IMPUGNED INFORMATION OF TAX ASCERTAINED AS
BEING PAYABLE UNDER SECTION 73 OF THE GST ACT IN FORM GST
DRC-01A BEARING NO. DCCT1BGM/DRC-1A/2023-24/T-419 DATED
13-06-2023 (ANNEXURE-A), NOTICE TO SHOW CAUSE BEARING NO.
DCCT(AUDIT-01) / BELAGAVI/KAKENO/2023-24/T-742 DATED
07-08-2023 ISSUED ALONG WITH SUMMARY OF SHOW CAUSE
NOTICE BEARING R.NO. DCCT1BGM/ DRC-01/2023-24/T-742 DATED
07.08.2023 BOTH ISSUED BY THE 6TH RESPONDENT (ANNEXURE- B)
AND THE IMPUGNED EX PARTE ORDER BEARING NO. DCCT AUDIT-1
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WP No. 100999 of 2024
BGM/ ORDER U/S.73 (9) / 2023-24/ T-2345 DATED 28.12.2023
ALONG WITH SUMMARY OF THE ORDER BEARING REFERENCE NO.
ZD2912230871972 DATED 28.12.2023 PASSED IN FORM-GST- DRC-
07 BY THE 6TH RESPONDENT (ANNEXURE- C). ALTERNATIVELY,
ISSUE A WRIT OR ORDER OR DIRECTION IN THE NATURE OF WRIT
OF PROHIBITION BY RESTRAINING THE RESPONDENTS FROM LEVY
GST ON UN-DENATURED EXTRA NEUTRAL ALCOHOL SUPPLIED BY
THE PETITIONER AS OUTSIDE THE PURVIEW OF CENTRAL GOODS
AND SERVICE TAX ACT, 2017 IN VIEW OF THE RECOMMENDATION
MADE BY THE 3RD RESPONDENT IN ITS 52ND MEETING HELD ON
07.10.2023 (ANNEXURE- T).
THIS PETITION, COMING ON FOR PRELIMINARY HEARING - B
GROUP, THIS DAY, THE COURT MADE THE FOLLOWING:
ORDER
Petitioner has approached this Court for grant of writ in the
nature of certiorari to quash the Show Cause Notice dated
07.08.2023 issued by respondent No.6 and alternatively issue
the writ in the nature of prohibition by restraining the
respondents from levying the Karnataka Goods and Services
Tax, 2017 (for short, 'KGST') on Extra Neutral Alcohol (for
short, 'ENA') supplied by the petitioner.
2. Heard learned counsel Sri.Raghavendra B. Hanjer
and Sri.H.R.Kambiyavar, for petitioner and learned counsel
Sri.M.B.Kanavi, for respondent No.1, learned counsel Sri.Girish
NC: 2024:KHC-D:6369
Hulamani for respondent Nos.2 and 3 and Sri.P.N.Hatti, learned
High Court Government Pleader for respondent Nos.4 to 6.
3. Learned counsel for the petitioner submits that the
petitioner is aggrieved by the Show Cause Notice produced as
per Annexure-B by respondent No.6, calling upon the petitioner
to Show Cause as to why the KGST should not be demanded on
Extra Neutral Alcohol supplied by the petitioner. According to
the petitioner the ENA being un-denatured spirit is not covered
under the notification relied on by the respondents and
respondents have no authority to issue such Show Cause
Notices. Therefore, petitioner is before this Court.
4. Learned counsel submits that when notifications
relied on by respondents disclose that the ENA being denatured
spirit is not covered under the KGST rate schedule, respondents
cannot justify the Show Cause Notice produced as per
Annexure-B. Therefore, the petitioner is seeking the relief of
writ in the nature of certiorari.
5. Learned counsel for the petitioner placed reliance
on the decision of the Hon'ble Apex Court in Bihar Distillery
NC: 2024:KHC-D:6369
and another Vs. Vs. Union of Indian and others1, in
support of his contention that the industries engaged in
manufacture of rectified spirit exclusively for obtaining or
manufacturing potable liquors shall be under exclusive control
of the State Government and therefore, it is only the State
Government which can have the say in the matter. Therefore,
respondent No.6 was not having any authority to issue the
Show Cause Notice. Accordingly, he prays for allowing the
petition.
6. Per contra, learned counsel for respondents
opposing the petition submitted that the petitioner is
challenging Annexure-B-Show Cause Notice issued by
respondent No.6 dated 07.08.2023. As per Annexure-B
respondent No.6 has referred to the notification issued by the
Central Government and when petitioner was called upon to
Show Cause as to why total GST Rs.23,28,55,190/- should not
be demanded. The petitioner was called upon to submit his
written explanation within a period of 30 days. The same was
not complied by the petitioner and he has not submitted any
written explanation. This Show Cause Notice was issued under
(1997) 2 SCC 727
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Section 50 of KGST. The document produced by the
respondents disclose that respondent No.6 is having the
authority under the notification issued by the Karnataka Central
Government to levy the tax and KGST. Accordingly, the Show
Cause Notice was issued. The petitioner was challenged the
Show Cause Notice without filing his written explanation.
7. Learned counsel for the respondents placed reliance
on the decision of the Apex Court in Union of India Vs
Coastal Container Transporters Associations and others2,
in support of his contention that, the Supreme Court has made
it very clear referring to several decisions that at the stage of
issuance of the Show Cause Notice, the petitioner cannot
challenge the same without submitting the written explanation.
Therefore, petition itself is not maintainable and prays for
dismissal of the petition.
8. Learned counsel further submitted that in view of
the decision of the Division Bench of Allahabad High Court in
Jain Distillery Private Limited Vs. State of U.P. and
(2019) 73 GST 211
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others3. The decision of Bihar Distillery (supra) relied on by
the learned counsel for the petitioner is considered and it is
held that it is against the 7 judges Bench decision in
Synthetics and Chemicals Ltd and other Vs. state of U.P
and others4. Therefore, no reliance could be placed on the
decision relied on by learned counsel for the petitioner.
9. Learned counsel submitted that the petitioner has
chosen to submit his written explanation to the Show Cause
Notice and there is no reason as to why he has not chosen to
do so. Under such circumstances, this Court may not interfere
at the stage of the Show Cause Notice to pass any order as it is
the Competent Authority which will decide the issue, if any,
raised by the petitioner. Accordingly, he prays for dismissal of
the petition as not maintainable.
10. Learned High Court Government Pleader for
respondent Nos.4 to 6 adopting the arguments addressed by
learned counsel for respondent Nos.2 and 3 submits that since
it is the only Show Cause Notice which was issued by
MANU/UP/2425/2021
1(1980)2 SCC 441
NC: 2024:KHC-D:6369
respondent and since the petitioner has not chosen to file his
written explanation to the said Show Cause Notice. The petition
is liable to be dismissed as not maintainable.
11. Perused the material on record.
12. Petitioner is aggrieved by issuance of show-cause
notice dated 07.08.2023 issued by respondent No.6 calling
upon by the petitioner to show-cause as to why demand for
KGST at Rs.23,28,55,190/- should not be levied. The petitioner
was called upon to submit his written explanation for not
making demand along with the interest. It is also stated that
petitioner can seek personal hearing while filing the written
explanation. It is made clear that no such written explanation
was submitted nor the opportunity to have the personal hearing
is sought for by the petitioner. No reasonable explanation is
given by the petitioner as to why he has not chosen to file
written explanation, seeking personal hearing.
13. As rightly contended by the learned counsel for the
respondents, it is only a show-cause notice issued by
respondent No.6 calling upon the petitioner to submit his
explanation. An option was also given to seek personal hearing.
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Even though, there is no explanation by the petitioner for the
reasons best known to him, the petitioner has rushed to this
court seeking to quash the show-cause notice on several
grounds and such grounds could have been raised by the
petitioner in his written explanation as to why said show-cause
notice could not have been issued.
14. Even though learned counsel for the petitioner
placed reliance on the decision in Bihar Distillery (supra), the
dispute in the said case was in respect of cancellation of
licence. On the other hand, learned counsel for the respondents
placed reliance on the recent decision of the Hon'ble Apex Court
Union of India (supra) where the Apex Court in para 19 held
as under.
"19. On the other hand, we find force in the contention
of the learned senior counsel, Sri Radhakrishnan,
appearing for the appellants that the High Court has
committed error in entertaining the writ petition
under Article 226 of Constitution of India at the stage of
show cause notices. Though there is no bar as such for
entertaining the writ petitions at the stage of show cause
notice, but it is settled by number of decisions of this
Court, where writ petitions can be entertained at the
show cause notice stage. Neither it is a case of lack of
jurisdiction nor any violation of principles of natural
justice is alleged so as to entertain the writ petition at
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the stage of notice. High Court ought not to have
entertained the writ petition, more so, when against the
final orders appeal lies to this Court. The judgment of
this Court in the case of Union of India & Anr. v.
Guwahati Carbon Ltd. (supra) relied on by the learned
senior counsel for the appellants also supports their
case. In the aforesaid judgment, arising out of Central
Excise Act, 1944, this Court has held that excise law is a
complete code in order to seek redress in excise matters
and held that entertaining writ petition is not proper
where alternative remedy under statute is available.
When there is a serious dispute with regard to
classification of service, the respondents ought to have
responded to the show cause notices by placing material
in support of their stand but at the same time, there is
no reason to approach the High Court questioning the
very show cause notices. Further, as held by the High
Court, it cannot be said that even from the contents of
show cause notices there are no factual
disputes. Further, the judgment of this Court in the case
of Malladi Drugs & Pharma Ltd. v. Union of India,
relied on by the learned senior counsel for the appellants
also supports their case where this Court has upheld the
judgment of the High Court which refused to interfere at
show cause notice stage."
15. Therefore, it is clear that the Apex Court frowned
upon the practice of approaching this court on issuance of
show-cause notice, without giving written explanation to enable
the authority to consider his defence and to pass appropriate
orders. Therefore, I am of the opinion that the petitioner has
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rushed to this court to challenge the show-cause notice without
availing the opportunity given to him to submit his written
explanation. Therefore, the writ petition is not maintainable.
Accordingly, I proceed to pass the following:
ORDER
The writ petition is dismissed.
SD/-
JUDGE
AC,MBS/CT-ASC
