Facts of the Case

South Eastern Coalfields Limited, a Public Sector Undertaking and a 100% subsidiary of Coal India Limited, holding GST Registration No. AADCS2066EST003, filed WPT No.85 of 2023 before the High Court of Chhattisgarh, Bilaspur, challenging a third show-cause notice dated 16.01.2023 issued by the Additional Commissioner (Preventive), CGST, Raipur, under Section 73 of the Central Goods and Services Tax Act, 2017. The dispute concerned the petitioner's alleged liability to pay GST under the Reverse Charge Mechanism (RCM) on Chhattisgarh Development Cess and Environment Cess for the period July 2017 to July 2021. A first show-cause notice on this issue, issued on 21.09.2021 by the State GST authorities, was dropped on 27.04.2022; a second notice issued on 21.02.2022 was also dropped on 13.06.2022 following a DRC-05 order uploaded on the GST Portal. Despite this, the Central GST authorities issued a third show-cause notice on the same cause of action on 16.01.2023, which the petitioner challenged as impermissible repeat proceedings. The matter was heard on 09.10.2023 by Hon'ble Justice Rakesh Mohan Pandey.

Issues Involved

  1. Whether a third show-cause notice under Section 73 of the CGST Act could validly be issued on the same cause of action after two earlier notices on identical allegations had been dropped.
  2. Whether the writ petition was maintainable despite the availability of the statutory remedy of filing a reply to the show-cause notice.

Petitioner's Arguments

  • Once the first and second show-cause notices were dropped by the authorities on the same allegations, there was no occasion to issue a third notice repeating the same case.
  • A DRC-05 order dropping proceedings under Sections 73/74 had already been uploaded on the GST Portal and emailed to the petitioner on 14.06.2022.
  • A person cannot be subjected to a show-cause notice for the same cause of action twice or thrice; reliance was placed on Godrej Sara Lee Ltd. v. Excise and Taxation Officer, 2023 SCC OnLine SC 95, to argue that the alternative remedy bar does not apply where proceedings are wholly without jurisdiction.

Respondent's Arguments

  • The earlier notices were issued by the State GST authorities, whereas the impugned third notice was issued by the Central GST authorities, who had taken cognizance separately from 27.03.2021 and whose enquiry had not been properly conducted earlier.
  • The notice issued only sought a reply, and the extraordinary writ jurisdiction under Article 226 should not be exercised to short-circuit that opportunity, relying on Elesh Agrawal v. Union of India, Writ Tax No.753 of 2023 (Allahabad HC).
  • The State GST proceedings were effectively subsumed once the Central GST took cognizance on 27.03.2021, and the petitioner retained a full remedy to raise all defences in reply to the notice.

Court Order/Findings

  • The Court found that the second notice was not dropped because the authorities were satisfied with the petitioner's reply, but because the department had already taken cognizance of the same issue through a separate investigation.
  • Since the petitioner had an efficacious remedy of filing a reply to the show-cause notice, and since this was not a case of violation of natural justice or want of jurisdiction, the Court held that respondents had the authority of law to issue the notice under Section 73.
  • No exceptional case for interference under Article 226 was made out; the petition was dismissed, leaving the petitioner free to contest the notice on merits before the adjudicating authority.

Important Clarification

Repeated show-cause notices on the same cause of action are not automatically void; where an earlier notice is dropped for reasons unrelated to satisfaction on merits (such as parallel cognizance by another wing of GST authorities), a later notice by the authority actually seized of the investigation is not necessarily without jurisdiction, and writ interference is not warranted merely because prior notices existed.

Sections Involved

  • Section 73 of the Central Goods and Services Tax Act, 2017 – determination of tax not paid, short paid, or erroneously refunded for reasons other than fraud.
  • Reverse Charge Mechanism provisions under the CGST Act, 2017 applicable to Development Cess and Environment Cess.
  • Article 226 of the Constitution of India – writ jurisdiction and the rule of alternative remedy.

Decision – In Favour of

The decision favours the Department. The Court declined to quash the third show-cause notice and left the petitioner to contest the RCM liability on Development and Environment Cess through the statutory reply and adjudication process, without any interim protection.

Related Case Laws

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

Case Details

  • Court: High Court of Chhattisgarh, Bilaspur
  • Case No.: WPT No.85 of 2023
  • CNR: Not available on record
  • Coram: Hon'ble Justice Rakesh Mohan Pandey
  • Decision Date: 09 October 2023
  • Disposal Nature: Writ petition dismissed

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