Kerala High Court
Ayyappan Pillai vs The State Tax Officer, Mobile Squad ... on 30 September, 2024
Author: P Gopinath
Bench: P Gopinath
IN THE HIGH COURT OF KERALA AT ERNAKULAM
PRESENT
THE HONOURABLE MR. JUSTICE GOPINATH P.
MONDAY, THE 30TH DAY OF SEPTEMBER 2024 / 8TH ASWINA, 1946
WP(C) NO. 29409 OF 2024
PETITIONER:
AYYAPPAN PILLAI,
AGED 66 YEARS,
S/O. NATARAJA PILLAI, M/S AYYAPA BANGLES, MC 873,
CHINNAKKADA, KOLLAM, PIN - 691001.
BY ADVS.
BOBBY JOHN
S.AJAYGHOSH KUMAR
SANGEETHA S.KAMATH
RESPONDENTS:
1 THE STATE TAX OFFICER, MOBILE SQUAD NO.5, KOLLAM,
O/O. DEPUTY COMMISSIONER (INTELLIGENCE), SGST
DEPARTMENT, TAX COMPLEX, ASRAMAM, KOLLAM, PIN - 691002.
2 THE DEPUTY COMMISSIONER, TAX PAYER SERVICE DIVISION,
KOLLAM,SGST DEPARTMENT, TAX COMPLEX, ASRAMAM P O,
KOLLAM, PIN - 691002.
3 THE COMMISSIONER OF STATE GOODS AND SERVICE TAX
DEPARTMENT,
9TH FLOOR, TAX TOWER, KILLIPPALAM, KARAMANA P.O.,
THIRUVANANTHAPURAM, PIN - 695002.
4 STATE OF KERALA,
REPRESENTED BY THE SECRETARY TO GOVERNMENT, TAXES
DEPARTMENT, SECRETARIAT, THIRUVANANTHAPURAM, PIN -
691001.
5 THE CENTRAL BOARD OF INDIRECT TAXES AND CUSTOMS,
REPRESENTED BY THE PRINCIPAL COMMISSIONER GST, GST
POLICY WING, NO.503, B WING, 5TH FLOOR, CBIC,
HUDCOVISHALA BUILDING, BHIKAJI CAMA PLACE, R. K. PURAM,
NEW DELHI, PIN - 110066.
WP(C) NO. 29409 OF 2024
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6 UNION OF INDIA,
REPRESENTED BY ITS SECRETARY TO GOVERNMENT,
FINANCE DEPARTMENT, RAJPATH MARG, CENTRAL
SECRETARIAT, NEW DELHI, PIN - 110001.
BY SMT.JASMINE M M, GP
THIS WRIT PETITION (CIVIL) HAVING BEEN FINALLY HEARD
ON 30.09.2024, THE COURT ON THE SAME DAY DELIVERED THE
FOLLOWING:
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JUDGMENT
The petitioner is a registered person under the CGST /
SGST Acts. The petitioner was served with Ext.P3 show cause
notice under Section 74 of the CGST Act calling upon the petitioner
to show cause as to why certain proposals should not be finalized
against the petitioner. The petitioner submitted Ext.P4 reply. After
considering the reply submitted by the petitioner and after
affording to the petitioner an opportunity of being heard, Ext.P5
order was issued by the 2nd respondent confirming the proposals in
the show cause notice and finalizing a demand against the
petitioner. The petitioner filed Ext.P6 application for rectification
under Section 161 of the CGST Act, which was considered and
rejected by Ext.P10 order. The petitioner is thus before this Court
challenging Exts.P5 and P10 orders on various grounds.
2. The learned counsel appearing for the petitioner
would vehemently submit that the principal ground of challenge is
that there was no just cause or reason to invoke the provisions of
Section 74 of the CGST / SGST Acts in the case of the petitioner. It
is submitted that the wordings of Section 74 will suggest that it is
not every suppression or misstatement that should lead to
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proceedings under Section 74 and unless such suppression or
misstatement was willful and with the intention of evading tax, a
proceeding under Section 74 cannot be justified in law. It is
submitted that a reading of the show cause notice will show that
one of the reasons mentioned for invoking Section 74 is that the
petitioner is not a registered person. It is submitted that this is a
factually incorrect statement. It is submitted that the reasoning in
the show cause notice for invoking Section 74 of the CGST / SGST
Acts in the case of the petitioner is obviously a cut copy paste from
some other notice issued under Section 74 and has no relationship
with the facts of the case in so far as it pertains to the petitioner. It
is pointed out with reference to Ext.P5 order that there has been a
complete misunderstanding of the factual situation and without
actually verifying the stock and considering the explanations of the
petitioner, a huge demand has been made on the petitioner. It is
submitted that though the petitioner submitted an application for
rectification to correct the obvious mistakes in Ext.P5 order, the
rectification application was also mechanically rejected by Ext.P10
order. It is submitted that in such circumstances, Exts.P5 and P10
orders are liable to be set aside and the matter is liable to be
remanded to the files of the 2nd respondent for fresh adjudication,
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in accordance with the law. It is submitted that the proceedings are
also liable to be quashed on the ground that there was no reason to
invoke Section 74 of the CGST / SGST Acts.
3. The learned Government Pleader appearing for
the respondents would vehemently oppose the grant of any relief to
the petitioner. It is pointed out from the show cause notice as also
from Ext.P5 order that there are sufficient justifications for
invoking Section 74 of the CGST/ SGST Acts in the facts of the
present case. Pertinently it is pointed out that certain documents
which were stated to be 'estimates' were recovered which would
show that the sales or part of it was not being accurately recorded
by the petitioner leading to loss of revenue. It is submitted that
there were discrepancies in the stock which would also show that
there was unaccounted sales by the petitioner. It is submitted that
the contention of the learned counsel for the petitioner that the
invocation of Section 74 was on the basis that the petitioner is not a
registered person is not correct as the 1st paragraph of the show
cause notice itself refers to the petitioner as a registered person. It
is submitted that the use of the word 'registered' in paragraph 46 of
the show cause notice refers only to the failure to register the actual
sales and suppression and not to the fact that the petitioner is an
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unregistered person. It is submitted that the petitioner did not
even raised any objection before the officer that the provisions of
Section 74 were wrongly invoked in the facts and circumstances of
this case. It is submitted that even while considering the
application for rectification, the Officer had asked for certain
details and as can be seen from Ext.P10, the petitioner failed to
produce materials to justify any of the contentions taken by him
leading to rejection of the application for rectification.
4. Having heard the learned counsel for the
petitioner and the learned Government Pleader, I am of the view
that the petitioner has not made out any case for grant of the relief
sought for in the writ petition. A perusal of the show cause notice
would indicate that there are several instances of suppression
which have been pointed out in the show cause notice as a
justification for invoking Section 74 of the CGST / SGST Acts.
While the petitioner may have raised several contentions to show
that the allegations are not correct to reach a conclusion the
adjudication of disputed questions of fact will be necessary. It is
for the petitioner to get his claim adjudicated by the statutory
authorities under the CGST / SGST Acts. The procedure under
Article 226 of the Constitution of India cannot be invoked to
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determine disputed questions of fact especially on account of the
procedure adopted in this Court in respect of writ petitions under
Article 226 of the Constitution of India. The petitioner has no case
that the alternate remedy available to the petitioner is not effective
including for adjudicating the question as to whether there was just
cause or reason for invoking the extended period of limitation
(under Section 74) in the facts and circumstances of this case. The
learned Government Pleader is also right in contending that the
Officer did not invoke the extended period of limitation on the
ground that the petitioner was an unregistered person but on the
ground of suppression of sales willfully for the purpose of evasion
of tax. The wordings of Section 74 clearly indicates that in such
circumstances, the provisions of Section 74 could be invoked. A
reading of the Ext.P10 order indicates that though not within the
scope of rectification, the Officer had called for further details from
the petitioner and the petitioner failed to produce any further
details for the purpose of considering the contentions taken in the
application for rectification. For all these reasons, the writ petition
fails and will stand dismissed.
However, considering the fact that Ext.P5 order was
issued on 10.12.2023 and the petitioner had filed Ext.P6
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application for rectification on 22.01.2024 and the fact that the
rectification application was rejected only on 08.05.2024 and this
writ petition was filed in the month of August 2024, I am of the
view that the period from the date of filing of the rectification
application till today can be excluded for the purpose of
determining any period of limitation within which the petitioner
had to file an appeal against Ext.P5 order. It is also clarified that no
observation in this judgment will preclude the petitioner on raising
a contention before the Appellate Authority that there was no just
cause or reason for invoking the provisions of Section 74 of the
CGST / SGST Acts.
The writ petition is ordered accordingly.
Sd/-
GOPINATH P.
JUDGE
DK
WP(C) NO. 29409 OF 2024
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APPENDIX OF WP(C) 29409/2024
PETITIONER EXHIBITS
Exhibit P1 TRUE COPY OF THE CASE PROCEEDINGS OF
INSPECTION AND SEARCH OF BUSINESS
PLACE OF THE PETITIONER DATED
16.07.2022, ISSUED BY THE 1ST
RESPONDENT TO THE PETITIONER
Exhibit P2 TRUE COPY OF THE REPLY DATED
26.08.2022 SUBMITTED BY THE PETITIONER
BEFORE THE 1ST RESPONDENT
Exhibit P3 TRUE COPY OF THE SHOW CAUSE NOTICE
DATED 29.11.2022 ISSUED BY THE 1ST
RESPONDENT TO THE PETITIONER
Exhibit P4 THE TRUE COPY THE REPLY DATED
03.12.2022 SUBMITTED BY THE PETITIONER
IN RESPONSE TO THE THE SHOW CAUSE
NOTICE
Exhibit P5 TRUE COPY OF THE ORDER DATED
10.12.2023 ISSUED BY THE 2ND
RESPONDENT TO THE PETITIONER
Exhibit P6 TRUE COPY OF THE APPLICATION FOR
RECTIFICATION DATED 09.02.2024
SUBMITTED BY THE PETITIONER
Exhibit P7 TRUE COPY OF THE NOTICE DATED
25.03.2024 ISSUED BY THE 2ND
RESPONDENT TO THE PETITIONER
Exhibit P8 TRUE COPY OF THE REPLY DATED
27.03.2024 SUBMITTED BY THE PETITIONER
BEFORE THE 2ND RESPONDENT ON
15.04.2024
Exhibit P9 TRUE COPY OF THE HEARING NOTE DATED
15.04.2024 SUBMITTED TO THE 2ND
RESPONDENT ON BEHALF OF THE PETITIONER
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Exhibit P10 TRUE COPY OF THE ORDER DATED
08.05.2024 ISSUED BY THE 2ND
RESPONDENT TO THE PETITIONER
