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इस पोस्ट को हिंदी में सुने

Show Cause Notice issued without sufficient material or information is void: High Court

Petitioner:

Petitioner company has come to this Court for the invocation of the extraordinary jurisdiction of this Court contending that the Show Cause Notice is as vague as it could be. It does not have any substantial material on which the explanation has to be provided by the petitioner.

In the Show Cause Notice which is under challenge in the present writ petition, the respondent authorities have alleged that there appears to be non-payment of tax by the petitioner @ 28% and for which also, the explanation has been sought for by the petitioner.

Moreover, the SCN does not even provide any hint as to which of those transactions are doubtful or suspicious so far as the authority issuing the Show Cause Notice is concerned and which needs scrutiny and proof of the transactions made.

It was also the contention of the learned counsel for the petitioner that even so far as the rate of tax is concerned from November, 2017 onwards, there is not a single product manufactured by the petitioner company which has a rate of tax of more than 18%. Yet in the Show Cause Notice, the authorities have said of not paying tax at 28%.

Revenue:

Learned counsel submits that since the writ petition is at the show cause stage, it is always open for the petitioner to have responded to the Show Cause Notice with all clarifications, explanation and the documentary proofs and the respondent authorities would had scrutinized the same and if everything would had been found to be in order, the show cause proceedings could be dropped at that juncture itself. 

Also the contents of the Show Cause Notice itself is a self explanatory and the petitioner only has to respond to the same including the rate of tax on the products manufactured by the petitioner and the rate of tax at which they have paid tax to the Department and as such, there is no need for any adjudication in the present writ petition.

For the said reason, the learned counsel for the Department prayed for the rejection of the writ petition.

High Court:

It would be necessary at this juncture to take note of the contents of Show Cause Notice under challenge. A plain reading of the Show Cause Notice itself would give a clear indication that the .......

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Show Cause Notice

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Demand and Penalty

Excellent interpretation of the law, it is pertinent to note that the honorable judge has clarified the machinery provision of the section 73 that the authority shall have cogent sufficient materials in order to believe that there is appears to be material ground some information or some sort of compliant available to believe wrong interpretation or application of the rate of tax thereby evasion of tax or enough suspicion with regard to suppression of facts to initiate SCN.

So High Court verdict for the set aside or quash of SCN is welcome as it does not have substantial materials on which explanation has to be provided.

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