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),
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
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
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
