Facts of the Case

The petitioner, M/s Kool Tech Infra & Logistics, challenged a notice dated 20.04.2022 issued by the sixth respondent under Section 74 of the Central GST Act, 2017. The notice concerned a closing balance of Rs.50,39,347/- claimed as Cenvat credit in the petitioner's returns for the quarter ending June 2017, on the ground that the petitioner was not eligible to take credit of duty on inputs or tax on input services carried forward into the GST regime. The petitioner's case was that an earlier notice dated 06.04.2022, issued on the same cause of action under the Central Excise Tariff Act, 1985, had culminated in an order dated 30.08.2023, which was already the subject matter of a statutory appeal filed on 31.10.2023. Aggrieved by the parallel Section 74 notice, the petitioner invoked the writ jurisdiction of the High Court of Punjab and Haryana under Articles 226/227 of the Constitution.

Issues Involved

  1. Whether the writ court should entertain a challenge to a Section 74 CGST notice when the petitioner has not exhausted the statutory remedy of filing a representation under Section 74(9).
  2. Whether the pendency of an appeal against a related excise-law order affects the maintainability of the writ petition against the GST notice.

Petitioner's Arguments

  • The Section 74 notice dated 20.04.2022 arose from the same cause of action as an earlier Central Excise notice dated 06.04.2022, which had already resulted in an order now under statutory appeal.
  • Since the underlying dispute was effectively sub judice before the appellate forum, the parallel GST notice warranted intervention by the writ court.
  • The vires of certain provisions of the Act were also sought to be challenged in the writ petition.

Respondent's Arguments

  • The impugned notice under Section 74(1) permits the noticee to file a representation under sub-section (9), following which an order is to be passed by the authority.
  • The petitioner had not availed of this statutory remedy despite the notice having been issued as far back as 20.04.2022.
  • On a similar demand notice issued under the Act, the petitioner had in fact filed a reply, showing that the remedy of representation was neither unknown nor unavailable to it.

Court Order/Findings

  • The Division Bench noted that Section 74(9) of the CGST Act permits the noticee to file a representation before the authority passes an order, and the petitioner had not availed of this remedy despite having done so on a similar notice earlier.
  • The Court held that before invoking the extraordinary writ jurisdiction, it would be appropriate for the petitioner to first file a representation before the concerned authority so that the authority could consider the objections now raised in the writ petition.
  • The writ petition was disposed of with liberty to file such a representation; the Court expressly clarified that it had not commented on the merits of the case or adjudicated on the challenge to the vires of the provisions, and that the petitioner remained free to challenge any adverse order passed thereafter.

Important Clarification

Where a statute provides a specific mechanism for the noticee to represent against a show-cause notice before an order is passed, courts are generally reluctant to entertain a writ petition bypassing that mechanism, even if the notice is founded on a cause of action already under challenge in another proceeding. The proper course is to exhaust the representation/adjudication process first and reserve the writ remedy for any adverse order that follows.

Sections Involved

  • Section 74, Central Goods and Services Tax Act, 2017 — deals with determination of tax not paid or short paid, or input tax credit wrongly availed, by reason of fraud or wilful misstatement, and provides for representation and adjudication before an order is passed.
  • Articles 226/227, Constitution of India — invoked by the petitioner to seek writ relief against the impugned notice.

Decision – In Favour of

This is a procedural disposal rather than a decision on merits. The Court did not adjudicate the correctness of the Section 74 notice or the eligibility of the transitional Cenvat credit; it simply relegated the petitioner to the statutory representation route, keeping all substantive contentions open for a later challenge if an adverse order is passed. The outcome is therefore neutral, disposed of with liberty, and cannot honestly be characterised as a win for either the Assessee or the Department.

Related Case Laws

No directly on-point case notes are currently published on this site.

Case Details

  • Court: High Court of Punjab and Haryana at Chandigarh
  • Case No.: CWP-26339-2023
  • CNR: 2023:PHHC:149194-DB
  • Coram: Hon'ble Mr. Justice G.S. Sandhawalia and Hon'ble Ms. Justice Lapita Banerji
  • Decision Date: 2023-11-23
  • Disposal Nature: Disposed of with liberty

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