Karnataka High Court
M/S Athani Sugars Limited vs Union Of India on 15 April, 2024
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WP No. 101492 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.101492/2024(T-RES)
BETWEEN:
M/S. ATHANI SUGARS LIMITED,
(A PUBLIC LIMITED COMPANY,
INCORPORATED UNDER THE
COMPANIES ACT, 1956)
REP. BY ITS, SENIOR ACCOUNTS OFFICER,
SRI AMIT S/O. MOHAN JADHAV,
AGED ABOUT 40 YEARS, VISHNU NAGAR,
AT AND POST. NAVALIHAL, ATHANI TALUK,
BELAGAVI DISTRICT - 591 234.
...PETITIONER
(BY SRI RAGHAVENDRA B. HANJER, AND
SRI H. R. KAMBIYAVAR, ADVOCATE)
AND:
1. UNION OF INDIA,
REPRESENTED BY ITS SECRETARY,
Digitally signed MINISTRY OF FINANCE,
by MANJANNA
E DEPARTMENT OF REVENUE,
Location: High NORTH BLOCK, RASHTRAPATI BHAWAN,
Court of
Karnataka DEFENCE HEAD QUARTERS,
NEW DELHI - 110 001.
2. THE CENTRAL BOARD OF INDIRECT
TAXES AND CUSTOMS,
REPRESENTED BY ITS CHAIRMAN,
HAVING ITS OFFICE AT NORTH BLOCK,
RASHTRAPATI BHAWAN,
DEFENCE HEADQUARTERS,
NEW DELHI - 110 001.
3. THE GOODS AND SERVICE TAX COUNCIL,
REPRESENTED BY ITS CHAIRMAN,
5TH FLOOR, TOWER II,
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WP No. 101492 of 2024
JEEVAN BHARTI BUILDING,
JANPATH ROAD, CONNAUGHT PLACE,
NEW DELHI - 110 001.
4. THE PRINCIPAL COMMISSIONER
OF CENTRAL TAX, BELGAUM,
COMMISSIONERATE, NO.71,
CLUB ROAD, BELAGAVI - 590 001.
5. THE ADDITIONAL COMMISSIONER
OF CENTRAL TAX,
BELAGAVI COMMISSIONERATE,
NO.71, CLUB ROAD,
BELAGAVI - 590 001.
6. STAE OF KARNATAKA,
REPRESENTED BY ITS SECRETARY,
MINISTRY OF REVENUE,
VIDHANA SOUDHA, AMBEDKAR VEEDHI,
BENGALURU - 560 001.
7. M/S. KARNATAKA SATE BEVERAGES
CORPORATION LIMITED,
REPRESENTED BY ITS MANAGING DIRECTOR,
4TH FLOOR, TTMC 'A' BLOCK,
BMTC BUILDING, K H ROAD,
SHANTINAGAR,
BANGALORE - 560 027.
...RESPONDENTS
(BY SRI M.B.KANAVI, ADVOCATE FOR R1;
SRI GIRISH HULAMANI, ADVOCATE FOR R2 TO R5;
SRI P.N.HATTI, HCGP FOR R6;
R7 IS SERVED)
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 SHOW CAUSE NOTICE BEARING F.NO.
GEXCOM/ADJN/GST/ADC/1809/2023-ADJN-O/O COMMR-CGST-
BELAGAVI (SCN SL.NO. 23/2023-24 GST AND 7010
DIN.20231257TC0000999A1D) DATED. 21.12.2023 ISSUED BY THE
4TH RESPONDENT IN FORM-GST-DRC-02 (ANNEXURE-A).
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
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WP No. 101492 of 2024
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-L) AND ETC.,
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
21.12.2023 issued by respondent No.4 and alternatively issue
the writ in the nature of writ of prohibition by restraining the
respondents from the levying on Goods and Services Act, 2017
(for short, 'GST') on un-denatured Extra Neutral Alcohol
supplied by the petitioner and in view of the recommendation
made by the respondent No.3 as per Annexure-L.
2. Heard learned counsel Sri.Raghavendra B. Hanjer
and Sri.H.R.Kambiyavar, for petitioner, learned counsel
Sri.M.B.Kanavi, for respondent No.1, learned counsel Sri.Girish
Hulamani, for respondent Nos.2 to 5 and Sri.P.N.Hatti, learned
High Court Government Pleader for respondent No.6.
3. Learned counsel for the petitioner submits that the
petitioner is aggrieved by the Show Cause Notice produced as
per Annexure-A passed by respondent No.6 calling upon the
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petitioner to Show Cause as to why the GST could 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 the notifications
relied on by respondents disclose that the ENA being denatured
spirit is not covered under GST rate schedule, respondents
cannot justify the Show Cause Notice produced as per
Annexure-A. Therefore, petitioner is before this Court seeking
the relief of writ in the nature of certiorari and any other writs
to be granted under this circumstance.
5. Learned counsel for the petitioner placed reliance
on the decision of the Hon'ble Apex Court in Bihar Distillery
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
(1997) 2 SCC 727
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of the State Government and therefore, it is only the State
Government which can have the say in the matter. Therefore,
respondent Nos.4 and 5 were not having any authority to issue
the Show Cause Notice. Accordingly, he prays for allowing the
petition.
6. Per contra learned counsel for respondent Nos.2
and 5 opposing the petition submitted that the petitioner is
challenging Annexure-A-Show Cause Notice issued by
respondent No.4 dated 21.12.2023. As per Annexure-A
respondent No.4 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.91,71,56,925/- 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
Section 50 of Goods and Services Tax (for short, 'the GST Act').
The document produced by the respondents discloses that
respondent Nos.2 and 3 are having the authority under the
notification issued by the Central Government to levy the tax
and GST. Accordingly, the Show Cause Notice was issued. The
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petitioner was challenged the Show Cause Notice without filing
his written explanation.
7. Learned counsel for the respondent 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
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
(2019) 73 GST 211
MANU/UP/2425/2021
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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 No.6 adopting the arguments addressed by learned
counsel for respondent Nos.2 to 5 submits that since it is only
the Show Cause Notice which was issued by 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.
1(1980)2 SCC 441
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12. Petitioner is aggrieved by issuance of show-
cause notice dated 21.12.2023 issued by respondent No.4
calling upon by the petitioner to show-cause as to why
demand for GST at Rs.91,71,56,925/- 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.4 calling upon the petitioner to submit his
explanation. An option was also given to seek personal
hearing. Even though, there is no explanation by the
petitioner for the reasons best known to him, the
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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
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writ petition at 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 practice on approaching this court of
issuance of show-cause notice, without giving written
explanation to enable the authority to consider his defence
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and to pass appropriate orders. Therefore, I am of the
opinion that the petitioner has 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
