Madras High Court
M/S.Sl Lumax Limited vs Deputy Commissioner Of State Taxes-Ii on 1 March, 2024
Author: Senthilkumar Ramamoorthy
Bench: Senthilkumar Ramamoorthy
W.P.Nos.5066, 5067, 5070, 5071 of 2024
IN THE HIGH COURT OF JUDICATURE AT MADRAS
DATED: 01.03.2024
CORAM
THE HONOURABLE MR.JUSTICE SENTHILKUMAR RAMAMOORTHY
W.P.Nos.5066, 5067, 5070 & 5071 of 2024
and W.M.P.Nos.5577, 5578, 5582, 5582, 5585, 5588 & 5587 of 2024
M/s.SL Lumax Limited
(Represented by its Chief Financial Officer Shri.G.Murugan)
Ground Floor, G14, 15 & 25
SL Lumax Industries Limited Manufacturing Unit
Sipcot Industrial Complex
Irunkattukottai
Sriperumpudur 602 117. ... Petitioner in all WP's
-vs-
Deputy Commissioner of State Taxes-II
Large Taxpayer Unit
Integrated Commercial Taxes Building
Nandanam, Chennai 600 035. ... Respondent in all WP's
PRAYER in W.PNo.5066 of 2024: Writ Petition filed under Article
226 of the Constitution of India, pleased to issue a Writ of Certiorari,
calling for the records and quashing the impugned show cause notice
bearing GSTIN 33AAACL1857B1Z1/2017-18 dated 31.01.2024 along
1/11
https://www.mhc.tn.gov.in/judis
W.P.Nos.5066, 5067, 5070, 5071 of 2024
with a summary in DRC-1 bearing reference No.ZD330124167260W
dated 31.01.2024, issued by the respondent.
PRAYER in W.PNo.5067 of 2024: Writ Petition filed under Article
226 of the Constitution of India, pleased to issue a Writ of Certiorari,
calling for the records and quashing the impugned show cause notice
bearing GSTIN 33AAACL1857B1Z1/2021-22 dated 31.01.2024 along
with a summary in DRC-1 bearing reference No.ZD330124167753H
dated 31.01.2024, issued by the respondent.
PRAYER in W.PNo.5070 of 2024: Writ Petition filed under Article
226 of the Constitution of India, pleased to issue a Writ of Certiorari,
calling for the records and quashing the impugned show cause notice
bearing GSTIN 33AAACL1857B1Z1/2018-19 dated 31.01.2024 along
with a summary in DRC-1 bearing reference No.ZD330124167442Q
dated 31.01.2024, issued by the respondent.
PRAYER in W.PNo.5071 of 2024: Writ Petition filed under Article
226 of the Constitution of India, pleased to issue a Writ of Certiorari,
calling for the records and quashing the impugned show cause notice
2/11
https://www.mhc.tn.gov.in/judis
W.P.Nos.5066, 5067, 5070, 5071 of 2024
bearing GSTIN 33AAACL1857B1Z1/2022-23 dated 31.01.2024 along
with a summary in DRC-1 bearing reference No.ZD330124167803K
dated 31.01.2024, issued by the respondent.
For Petitioner : Mr.G.Natarajan
in all WP's
For Respondent : Mr.C.Harsha Raj, AGP (T)
in all WP's
**********
COMMON ORDER
In all these writ petitions, show cause notices issued in respect
of distinct assessment periods are challenged. The petitioner is
engaged in the business of manufacturing and supplying electrical
lighting or signaling equipment used in motor vehicles. As a
registered person under applicable GST laws, the petitioner was
filing returns and paying applicable taxes by classifying the goods
under chapter heading 8512 of the then Central Excise Tariff. After
https://www.mhc.tn.gov.in/judis
W.P.Nos.5066, 5067, 5070, 5071 of 2024
the introduction of GST, the rate of CGST payable on various goods
were notified under Notification No.1/2017 Central Tax (Rate) dated
28.06.2017. In the initial period commencing from 01.07.2017, the
parts manufactured by the petitioner and falling under Chapter 8512
attracted 28% GST in the aggregate. With effect from 16.11.2017,
under Notification No.41/2017 Central Tax (Rate) dated 14.11.2017,
the rate of tax was reduced to 18% in the aggregate. Therefore, the
petitioner was paying taxes on these items at 18% from 14.11.2017.
2. In these facts and circumstances, the petitioner received an
intimation in Form DRC-01A on 11.12.2023 stating that the goods
manufactured by the petitioner are classifiable under chapter 8708
and not under 8512 and indicating the amount payable by the
petitioner. The petitioner replied thereto on 18.12.2023 and stated
that the goods are correctly classified under chapter 8512. The show
cause notices impugned herein were issued on 31.01.2024 upon
receipt of the petitioner's reply.
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W.P.Nos.5066, 5067, 5070, 5071 of 2024
3. Learned counsel for the petitioner contends that the show
cause notices were issued by pre-determining and pre-judging that
the goods fall within Chapter 8708 and not 8512. By referring to the
notes under Section XVII, particularly notes 2 and 3 to chapter 85,
learned counsel submitted that these notes, which appear prima facie
to be conflicting, are required to be interpreted in the light of the
HSN Explanatory Notes. He also submits that the show cause notices
were issued by relying on the judgment of the Hon'ble Supreme
Court in Westinghouse Saxby Farmets Ltd. v. Commissioner of Central
Excise, Calcutta. By referring to instruction No.1/2022 Customs dated
05.01.2022, he submits that instructions were issued to take into
consideration all facts, details of individual cases and all decisions on
the subject before arriving at the appropriate classification. Since the
impugned show cause notices are in the nature of a demand for
payment, learned counsel submits that interference by this Court is
warranted.
https://www.mhc.tn.gov.in/judis
W.P.Nos.5066, 5067, 5070, 5071 of 2024
4. In response to these submissions, Mr.C.Harsha Raj, learned
Additional Government Pleader, who accepts notice on behalf of the
respondent, submits that classification should be undertaken either
by the assessing officer or the authority for advance rulings. He also
points out that a show cause notice is merely a starting point and that
upon receipt of the assessee's reply, the assessing officer would
complete the assessment only upon taking into consideration all
relevant material. He also submits that the issue of classification
should be left to the wisdom of the assessing officer and that the
exercise of quasi-judicial functions in such regard should not be
shackled by this Court.
5. He also submits that the petitioner's apprehensions are
misplaced and that the assessing officer would duly take into
consideration all materials placed on record by the assessee,
including all precedents.
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W.P.Nos.5066, 5067, 5070, 5071 of 2024
6. Ordinarily, a show cause notice is not interfered with unless
issued by a person without jurisdiction or unless no case is made out
even proceeding on the assumption that the statements in the show
cause notice are correct. Obviously, the above principles are not cast-
in-stone. In paragraph 14 of the impugned show cause notices, the
assessing officer recorded as under:
"14. Therefore it is proposed to levy the above said
turnover at the rate of 28% as such supply should have
fallen under HSN 8708 for the tax period July-2017 to
March-2018. Moreover, since you are an automobile
industry you cannot claim that you genuinely classify
your product with right HSN code. To suppress the tax
payable to Government treasury you willingly reduce
the tax rate from 28% to 18% with intention to suppress
the fact that you are manufacturing commodity of 28%
that is why section 74 has been involved here. Hence,
you are requested to pay the difference amount as
detailed below:-
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W.P.Nos.5066, 5067, 5070, 5071 of 2024
Year Detail TAX Penalty at 100% Interest u/s 50(1) Grand
s Total
CGST SGST Total CGST SGST Total CGST SGST Total
2017- Short 17,88,5 17,88,5 35,77,0 17,88,5 17,88, 35,77, 18,28, 18,28, 36,56, 1,08,10,
18 Payme 0,824 0,824 1,647 0,824 50,824 01,647 39,442 39,442 78,884 82,177.7
Tax
Grand 17,88,5 17,88,5 35,77,0 17,88,5 17,88, 35,77, 18,28, 18,28, 36,56, 1,08,10,
Total 0,824 0,824 1,647 0,824 50,824 01,647 39,442 39,442 78,884 82,178
Please note that interest have been calculated till
22/01/2024 only and the same shall be calculated till the
date of payment.
Personal Hearing:-
You are requested to pay the amount of tax as
ascertained above along with the amount of aforesaid
interest and penalty under section 74 of the TNGST Act
2017 and also submit objection if any against the
proposals in DRC01 within 30 days from the date of
receipt of this notice and you may also avail the
opportunity of personal hearing on 05.03.2024 at 11.00
AM before the undersigned."
7. The above extract is prima facie indicative of pre-judgment in
as much as the assessee has been called upon to pay the quantified
sum and not show cause as to why the said amounts are not payable.
Therefore, I am of the view that these writ petitions are liable to be
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W.P.Nos.5066, 5067, 5070, 5071 of 2024
disposed of by making a few observations.
8. The petitioner has placed on record the notes under Section
XVII, which deals with chapter 85. He has also placed on record the
HSN Explanatory notes. In multiple judgments of this Court and the
Supreme Court, the HSN Explanatory notes have been referred to
and relied upon as an authoritative guide to issues relating to
classification. The petitioner has also placed for consideration
Instruction No.1/2022, which refers to several judgments of the
Supreme Court. If the petitioner / assessee placed this material
before the assessing officer, it is needless to say that the assessing
officer is under an obligation to consider this material with an open
mind in an objective manner before concluding the assessment.
9. Therefore, W.P.Nos.5066, 5067, 5070 and 5071 of 2024 are
disposed of by directing the petitioner to reply to the respective show
cause notices. Upon receipt thereof, the assessing officer is directed
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W.P.Nos.5066, 5067, 5070, 5071 of 2024
to provide a reasonable opportunity to the petitioner, including a
personal hearing, and thereafter conclude the assessments by taking
note of the observations set out above. No costs. Consequently,
W.M.P.Nos.5577, 5578, 5582, 5582, 5585, 5588 & 5587 of 2024 are
closed.
01.03.2024
rna
Index : Yes / No
Internet : Yes / No
Neutral Citation: Yes / No
To
Deputy Commissioner of State Taxes-II
Large Taxpayer Unit
Integrated Commercial Taxes Building
Nandanam, Chennai 600 035.
https://www.mhc.tn.gov.in/judis
W.P.Nos.5066, 5067, 5070, 5071 of 2024
SENTHILKUMAR RAMAMOORTHY,J
rna
W.P.Nos.5066, 5067, 5070 & 5071 of 2024
and W.M.P.Nos.5577, 5578, 5582, 5582,
5585, 5588 & 5587 of 2024
01.03.2024
https://www.mhc.tn.gov.in/judis
