GUWAHATI: A division bench of the Gauhati High Court has disposed of a series of writ petitions wherein the validity of S 16(2) of the CGST Act was under challenge.
The court set aside and quashed the show-cause notices and the consequential orders holding that on failure of the seller to pay the taxes the purchaser cannot be penalised when the transaction is bona fide.
The court granted liberty to the department to take such action if the transaction is found to be not a bona fide one in accordance with law. The matter was argued by Dr. Ashok Saraf, Sr. Advocate on behalf of the petitioners.
“In that view of the matter, the show cause notices issued are required to be held to have been issued without any jurisdiction and by wrong interpretation of the powers under Section 11A read with Section 11AA and therefore, the same are required to be set aside. In view of all the decisions above, the impugned show cause notices cannot be sustained, the same are accordingly, set aside and quashed,” ordered the division bench.
Under Article 226 of the Constitution, the high court, having regard to the facts of the case, has a discretion to entertain or not to entertain a writ petition. But the high court has imposed upon itself certain restrictions one of which is that if an effective and efficacious remedy is available, the high court would not normally exercise its jurisdiction. But the alternative remedy has been consistently held by this court not to operate as a bar in at least three contingencies, namely, where the writ petition has been filed for the enforcement of any of the Fundamental Rights or where there has been a violation of the principle of natural justice or where the order or proceedings are wholly without jurisdiction or the vires of an Act is challenged. “There is a plethora of case-law on this point but to cut down this circle of forensic whirlpool, we would rely on some old decisions of the evolutionary era of the constitutional law as they still hold the field,” said the court after reviewing several judgements of the apex court.
“There is another aspect that needs to be dealt with in the present proceedings. The petitioners before this Court in the present proceedings are questioning the show cause notices issued by the department. Although, the High Court in exercise of judicial review under Article 226 of the Constitution of India would not ordinarily interfere with the show cause notices issued, however, where a show cause notice has been issued by an authority wholly without jurisdiction or by way of wrongful usurpation of power, the person aggrieved need not be relegated to avail any statutory alternative remedy available. The Writ Court in exercise of judicial review can interfere with the show cause notices when the same is issued wholly without jurisdiction and/or wrong usurpation of power,” said the court.
“In all these writ petitions, the petitioners have challenged the demand-cum show-cause notices issued by the Central Excise Authority directing the petitioners to show cause as to why the amount of Education Cess and Secondary and Higher Education Cess, which were refunded to the petitioners should not be recovered under the Provisions of Section 11A(i) of the Central Excise Act, 1944, (hereinafter known as the “Act”) and further as to why interest should not be charged and realized in terms of Section 11AA of the Act. The show cause notices were issued in view of the Judgment and Order of the Apex Court in M/S Unicorn Industries –Vs- Union of India reported in (2020) 3 SCC 492 whereby an earlier Judgment of the Apex Court, namely, SRD Nutrients Pvt. Ltd. –Vs- Commissioner of Central Excise, Guwahati reported in (2018) 1 SCC 105 have been declared to be per in curiam.”
According to the department, the refunds sanctioned to the petitioners earlier were made pursuant to the judgment of the apex court in SRD Nutrients Pvt. Ltd. (supra) and the said judgment having been held to be “per in curiam” by the apex court in the recent Judgment of M/S Unicorn Industries –Vs- Union of India; the refunds earlier granted to the petitioners on the strength of the Judgment in M/S SRD Nutrients (supra) have become “erroneous refunds” and, therefore, the same are sought to be recovered from the petitioners by way of impugned show cause notice.
For enhancing the industrial progress in the Northeast region and for attracting the investees with a view to foster industrial growth and industrial activities in the region, the government of India announced an Industrial Policy Resolution vide Notification dated 24.12.1997. The Industrial Policy Resolution contained a package of incentives and concessions for the industries established in the entire Northeastern Region.
The petitioners included, Topcem India, Cement International Ltd, Digboi Carbon Pvt. Ltd., Pan Parag India Ltd., Jumbo Packaging Industries besides some
