GST Case Law Compendium 1. Whether Provisional Attachment under Section 83 can be done based on prima facie findings of the investigation? Yes, the Honorable Delhi High Court in the case of JV Creatives (P.) Ltd. v. Principal Additional Director General, DGGI, Gurugram Zonal Unit [W.P. (C) No. 10042 of 2024 dated July 23, 2024] dismissed the writ petition filed against the order of provisional attachment passed under Section 83 of the Central Goods and Services Tax Act. The Honorable Court noted that the Commissioner prima facie opined that passing of the order was necessary to protect the interest of the revenue in a view that there is a nexus between the supplier and recipient wherein it has been alleged that the supplier was non-existent and the invoice has been issued without the supply of goods. The Honorable Court observed that the investigations indicate that the petitioner had claimed ITC amounting to Rs.26,91,938/- from two suppliers who were found to be fake. Further, during departmental visits, one of the supplier was found non-existent, and further inquiries revealed that the proprietor of such a firm was a taxi driver. Another firm was also floated by master-mind and this is recorded in the statement of such master-mind. These facts clearly indicate that the Respondent Commissioner found it necessary to provisionally attach the Petitioner’s bank account to protect the interest of the revenue as it clearly seems that there is a nexus between the supplier and the Petitioner. Hence, the writ petition is unwarranted and accordingly dismissed and the Impugned Order is upheld. 2. Whether an Order passed on the date of personal hearing is valid? No, the Honorable Madras High Court in the case of M/s. SS Traders vs. Joint Commissioner (ST) (Intelligence) [Writ Petition No. 15363 of 2021 dated August 16, 2024] set aside the order and remanded back to pass a fresh order. The Honorable Court noted that the petitioner is mulct with huge tax liability vide Assessment Order and on the date of hearing, 105 pages’ order was passed which was technically impossible. The Honorable Court observed that the Impugned SCN was served dated February 11, 2021, to which the Petitioner replied on March 15, 2021, and requested three weeks-time. Pursuant to the reply, an SCN was issued on March 22, 2021, and the date of the personal hearing was fixed on April 06, 2021. The Petitioner filed a reply on March 31, 2021, and requested a fifteen-day time period. The Respondent-2 issued another SCN on April 07, 2021, and granted a final opportunity to the Petitioner for filing objections on or before April 12, 2021, and directed them to appear for a personal hearing on April 12, 2021. It was contended that goods were not received by the Petitioner and the Petitioner had not deliberately paid tax from Electronic Cash Register. The Petitioner had wrongly claimed/availed Input Tax Credit. The Petitioner contended that they cannot be found fault with on account of failure of the supplier to file statutory returns as is contemplated under the respective GST enactments. The supply of goods was directly from the place of storage godown/warehouse and the invoices were directly raised from the branch office of the head office. The Petitioner had also received consideration for the supplies affected and therefore, it cannot be said that no supply was affected. Lastly, the case was heard on April 12, 2021, and on the same date, the Impugned Order has been passed consisting of 105 pages, which is technically impossible as the Petitioner was fully heard on the said date. The Respondent-2 without considering the Petitioner’s contentions passed an Assessment Order dated April 12, 2021 for the Assessment Year 2017-18. The Honorable High Court held that the Impugned Order is quashed and shall be treated as an addendum to SCN dated February 11, 2021, and remitted the case back to the Respondents to pass a fresh order where the Petitioner shall deposit 10% of the disputed tax within a period of six weeks and shall file a reply to the Impugned Order. If the Petitioner fails to comply with the conditions, it shall be construed the writ petition was dismissed with liberty to proceed against the Petitioner. 3. Whether Summary of SCN in Form GST DRC-01 can substitute the statutory requirement of SCN under the CGST Act? No, the Honorable Gauhati High Court in the case of Construction Catalysers (P.) Ltd. v. State of Assam [WP(C) No.3912 of 2024 dated 26.09.2024] decided that the Summary of the Show Cause Notice in GST DRC-01 is not a substitute to the Show Cause Notice to be issued in terms with Section 73 (1) of the Central Act as well as the State Act. The Honorable Court noted that the petitioner was issued a Summary of the show cause in GST DRC-01 along with an attachment of the determination of tax. Further, the attachment to both the Summary of the SCN as well as the Summary of the Order uploaded in GST DRC-01 and GST DRC-07 was not authenticated by any signature of the Proper Officer. It is also noted that in a few cases, the opportunity of a personal hearing was not given, even though expressly asked by the petitioners. The Revenue argued that the attachment to the summary show cause notice in Form GST DRC-01 qualified as a valid show cause notice. The Honorable Court held that a summary show cause notice in Form GST DRC-01 cannot replace the statutory requirement of a show cause notice under Section 73(1), and a tax determination statement attached to DRC-01 is not equivalent to a proper notice. The Honorable Court further held that the SCN’s and Orders must be authenticated by a proper officer and that a personal hearing is mandatory under Section 75(4) if requested or if an adverse order is contemplated. Consequently, the impugned orders were set aside and quashed, and the Revenue was allowed to initiate fresh proceedings, with the period from the issuance of summary notices to the service of the judgment excluded from limitation under Section 73(10). 4. Whether a Notice for seizure can be served on the driver transporting the goods? Yes, the Honorable High Court of Orissa in the case of RSL Overseas LLP v. State of Odisha [W.P.(C) No. 21541 of 2024 dated 03.09.2024] dismissed the writ petition stating that service of notice under section 129 of the Act to the driver of the conveyance is valid and proper. The Honorable Court noted that there are two grounds of challenge to subsequently issued an order of demand of penalty dated 21st August, 2024. Firstly, the mandate in section 129 of the OGST Act, 2017 is for the notice to be issued within seven days of detention or seizure. It was not so done. Commencing from seizure dated 7th August, 2024, notice dated 14th August, 2024 was one day out of time and secondly, when it was informed to the authority of being the owner of the goods and person responsible therefor, noticing and thereafter serving demand notice on the driver was clear act on part of the authority to deny petitioner recourse in law to avail remedy. The Honorable Court observed that Sub-section (1) in section 129 commences with a non-obstante clause, to include any person transporting goods or storing them while in transit. Proviso under the sub-section says no such goods or conveyance shall be detained or seized without serving an order of detentions or seizure on the person transporting the goods. So it is clear that the provision includes the driver. Serving the notice to the driver transporting the goods was deemed valid under Section 129(1) of the Act. The court found no procedural irregularities in the issuance or service of the notice. For the first ground raised, interpretation of sub-section (3) in section 129 is required. While the first part of the provision provides for a period of within 7 days of detention or seizure, the second part of it provides for period of seven days from date of service of notice. On behalf of petitioner, distinction is sought to be drawn between the use of different phrases in said two parts of the provision. As per Chambers Dictionary 12th edition, the meaning of the word ‘of’ given includes ‘with respect to’. The seizure was on 7th August, 2024. Notice dated 14th August, 2024 issued to the driver thus, in the court’s view, was within 7 days of the seizure. Hence, the writ petition is dismissed, as no grounds for interference were established. 5. Whether proceedings under Section 74 can be initiated after closure of proceedings under Section 73? Yes, the Honorable Punjab & Haryana High Court in the case of Group M Media India Private Limited vs Union of India And Others (CWP-28974-2024 dated 24 October, 2024) dismissed the writ petition stating that the petitioner’s contentions are wholly misconceived. The Honorable Court noted that an SCN was issued under Section 73 of the Act to the petitioner and was dropped after filing of reply. However, the office of DGGI had also issued notice to the Assessee to which petitioner submitted its reply. Further, it is contended that the notice issued did not mention any incriminating allegations as to fraud or willful mis-statement with an intention to evade tax and also this is tantamount to parallel proceedings. The Honorable Court observed that the Assessee’s contentions were wholly misconceived, and relying upon HCL Infotech Ltd. vs. Commissioner, Commercial Tax and Anr., 2024 (9) TMI 1644, the Court held that dropping of notice issued under Section 73 would not prevent the authorities from independently initiating proceedings under Section 74 of the CGST Act. With regards to the contention of parallel proceedings, the Honorable Court noted that no proceedings under Section 74 were initiated in the present case, and only a notice was issued by DGGI seeking certain queries. Thus, the writ petition was dismissed. 6. Whether opportunity of hearing must be granted post blocking of ECL under Rule 86A of the CGST Rules? Yes, the Honorable High Court of Karnataka, in the case of K-9 Enterprises vs. State of Karnataka (W.P. no.104242 of 2023 dated 27/07/2023) disposed of writ petitions directing the Respondents to afford an opportunity of post decisional hearing to the petitioners, who shall be permitted to file their objections along with relevant supporting documents/material and on consideration of the same, competent authority shall pass a reasoned order in compliance of the requirements of Rule 86A. The Honorable Court noted that the provisional blockage of ECL was done by the Revenue and the petitioners contended that a pre-decisional hearing is mandatory before blocking the ECL under Rule 86A. A post-decisional hearing is not a substitute and should only occur if delay in a pre-decisional hearing is justifiable. It was further argued that blocking ITC must be based on an independent application of mind by the authorities, not solely on reports or instructions from other officers, ensuring that the decision is grounded in objective evidence. The Honorable Court noted that before issuing the impugned order, proper officer has arrived at a subjective satisfaction on the basis of the material available before him which he has referred to in the impugned order. The details of such material is not required to be provided or put forward by the competent authority at this stage as the investigation is still in progress. The Honorable Court relying on the decision rendered in the case of Dee Vee Projects Ltd vs. Govt. of Maharashtra 2022 SCC Online BOM 304, given the nature of power provided under Rule 86A though the statute does not provide for a personal hearing before passing any order under the said Rule, it has to be read into the provisions of the said Rule which is not expressly provided therein, so that a post-decisional or remedial hearing could be granted to the person/assessee affected by blocking of his ECL. Though post-decision hearing is not a substitute for pre-decisional hearing, in situations where pre-decisional hearing is likely to frustrate the interest and purpose of the Statute, the mechanism of post-decisional hearing will be the only alternative. Hence, writ petitions disposed of with directions, and depending upon the outcome of such orders, if necessary, further action shall be taken against the petitioners as provided under Sections 73 & 74 of the Act of 2017. 7. Whether the State authorities can initiate proceedings when Central authorities have already initiated the proceedings on the same subject matter? No, the Honorable Calcutta High Court in the case of Baazar Style Retail Ltd. vs. Deputy Commissioner of State Tax [W.P.A. No. 16185 of 2024 dated August 19, 2024] set aside the order and notice issued by the State authorities when proceedings have already been initiated by the Central authorities by relying on the provisions of Section 6(2)(b) of the WBGST Act, 2017. The Honorable Court noted that the State authorities issued SCN dated December 27, 2023, for the period FY 2018-2019 under Section 73 of the WBGST Act along with an order dated April 27, 2024 passed under Section 73(9) of the WBGST Act. Previously the proceedings on the same subject matter were initiated by the Central authorities by issuance of show cause-cum-demand notice in which the Petitioner has duly participated. The Honorable Court observed that Section 6(2)(b) of the WBGST Act has to be taken into consideration which clearly states that “where a proper officer under the State Goods and Services Tax Act or the Union Territory Goods and Services Tax Act has initiated any proceedings on a subject matter, no proceedings shall be initiated by the proper officer under this Act on the same subject matter”. It is noted that in the present case, the SCN has already been issued by the Central GST Department before the initiation of proceedings by the Respondent by issuance of the Impugned Notice and Order. Therefore, the Honorable Court opined that, the Impugned Notice and Order are not maintainable taking into consideration the aforesaid provisions, and held that the Impugned Notice and Orders are set aside, and the writ petition is disposed of. 8. Whether application for cancellation of GST registration can be rejected based on scrutiny proceedings against the taxpayer for determining tax liability of the past period? No, the Honorable Delhi High Court in the case of M/s Sanjay Sales India v. Principal Commissioner of Department of Trade and Taxes, Government of NCT, Delhi [Writ Petition (Civil) No. 10234 of 2024 dated July 26, 2024] held that the application for the cancellation of the GST registration cannot be denied on the ground that the scrutiny proceeding has been raised relating to the tax liability of the taxpayer for the past period. The Honorable Court noted that the Proper Officer was not satisfied with the petitioner’s application for the following reasons:(i) Cancellation Details – Others (Please specify) – Please pay due tax and penalties (ii) Cancellation Details – Others (Please Specify) – (PLEASE SUBMIT THE MONTHWISE DETAILS OF TAX DUE/PAID AND SALE/PURCHASE INVOICE ALONG WITH GR & STOCK REGISTER AND BANK STATEMENT SINCE DATE OF REGISTRATION.” The first ground, “Cancellation Details – Others (Please specify) –Please pay due tax and penalties”, is untenable reasoning given by the Respondent for rejecting the request to cancel the GST registration of the Petitioner. The cancellation of GST registration will not impact the Petitioner’s obligation to pay any outstanding taxes and penalties due to the discontinuation of the business. Further noted that the other reasoning given by the Respondent that the Petitioner is required to submit details of tax paid along with stock register and bank statements is irrational as it is settled law that the cancellation of the GST registration would not affect the Petitioner’s liability to pay due taxes or to be answerable for any statutory violation before the date of cancellation. The Honorable Court opined that the scrutiny of the Petitioner’s tax liability for the past period cannot be a ground for rejecting the Petitioner’s application for cancellation of GST Registration. The Honorable Court directed that the Respondent is required to process the Petitioner’s application for GST registration cancellation. Hence, the writ petition is disposed of. 9. Whether the petitioner can file an appeal after the expiry of the statutory time limit allowed? Yes, the Honorable Madras High Court, in the case of M/s Sri Shanmuga Motors vs. State Tax Officer [Writ Petition No. 11737 of 2024 dated June 03, 2024] had set aside the Appellate Order and directed the Department to hear the appeal on merits which has been filed beyond the condonable period for filing of appeal without going into the question of limitation. The Honorable Court noted that from a perusal of the appellate order, it is evident that the delay beyond the condonable period is 21 days only. Further, noted that the Petitioner had asserted in the affidavit that the tax liability was imposed under Section 74 of the GST Act despite the ingredients necessary for invoking Section 74 of the CGST Act were not satisfied. Considering this aspect, The Honorable Court held that the Impugned Appellate Order is set aside as the period of delay beyond the condonable period is only 21 days and directed the Respondent to receive and dispose of the appeal without going into the question of limitation. 10. Whether a penalty can be imposed when a designated route not taken during transportation? No, the Honorable Allahabad High Court (Lucknow Bench) in the case of Exide Industries Limited vs. Addl. Commissioner Grade-II (Appeal)-1, State Tax, Mainpuri and Another [Writ Tax No 173 of 2024 dated July 09, 2024] allowed the writ petition and held that goods are not liable for seizure and penalty cannot be imposed when designated route not taken during transportation as the documents accompanying the goods were found to be genuine. The Honorable Court noted that there is no specific provision that bounds the selling dealer to disclose the route to be taken during the transportation of goods or while goods are in transit however there was a provision under the VAT Act to disclose the route during transportation of goods to reach its final destination. Once the legislature itself in its wisdom has chosen to delete the said provision, the authorities were not correct in passing the seizure order even if the vehicle was not on a regular route or on a different route. The Honorable High Court relies upon the judgment of the Honorable Gujarat High Court in the case of M/s Karnataka Traders Vs. the State of Gujrat [Special Civil Application No. 19549 of 2021 dated January 06, 2022 opined that the Respondent was not required to seize the goods, once the documents accompanying the goods were found to be genuine and allowed the writ petition. 11. Whether writ petition is maintainable when an alternate remedy of appeal is not exercised? No, the Honorable High Court of Allahabad in the case of M/S Bushrah Export House V. Union of India Writ Tax No. – 200 of 2024 dated 31.07.2024 disposed of the writ petition with the direction to approach the appellate authority against the orders impugned. The Honorable Court noted that the petitioner, a manufacturer and exporter of garments, filed for a refund of Input Tax Credit on 18.10.2023 amounting to Rs. 98,62,180/- for the period from April 2020 to May 2020. A show cause notice was issued on 14.03.2024, beyond the statutory time limit prescribed under Section 54(7) of the CGST Act. Despite submitting a reply, the petitioner’s response was not considered, and an adverse order was passed on 01.05.2024. The petitioner sought the quashing of the order and the show cause notice, along with a direction for the refund of the claimed amount. The Honorable Court observed that the petitione