Facts of the Case

The Petitioner, Gayatri Educational and Charitable Trust, carries on educational activities and operated a coaching centre under the name "LIT". On 27.10.2020, officers of the Directorate General of Goods and Services Tax Intelligence (DGGI), Bhubaneswar, searched the Trust's premises and seized documents under Section 67, Central Goods and Services Tax Act, 2017, and issued summons under Section 70 of the Act calling for records. Further summons followed on various dates. On 28th/29th December, 2020, a show cause notice was issued alleging that the Trust had provided taxable "Commercial Training or Coaching" service without registration under Section 69 of the Finance Act, 1994, demanding service tax of Rs.65,35,000/- along with cesses, aggregating Rs.68,54,859/-, with applicable interest and penalty; the Trust replied on 04.05.2021. A further summons dated 15.02.2022 was issued under Section 70 of the CGST Act, 2017, in connection with alleged non-payment of GST. The Petitioner approached the Orissa High Court under Article 226, seeking to quash the show cause notice and the summons, and alleging that its application dated 12.12.2021 for supply of documents remained unconsidered.

Issues Involved

  1. Whether the show cause notice dated 28th/29th December, 2020 and the summons dated 15.02.2022 could be quashed by the High Court in writ jurisdiction.
  2. Whether the Petitioner's educational/coaching activities attracted service tax under the Finance Act, 1994 and GST under the CGST Act, 2017, could be decided by the Court at the show cause stage.
  3. What directions were warranted regarding the Petitioner's pending application for supply of documents.

Petitioner's Arguments

  • The services rendered by the Trust fell under the negative list during the service tax regime, and its educational activities do not fall within the purview of the GST Act.
  • Despite having produced the documents earlier called for under the show cause notice, the department issued frequent, repeated summons, including the summons dated 15.02.2022, causing mental agony and undue pressure to the Trust and its Trustee.
  • The Trust's application dated 12.12.2021 for supply of documents had not been considered by the authority.

Respondent's Arguments

  • The Senior Standing Counsel for the Opposite Parties objected to entertaining the writ petition and urged that it was liable to be dismissed in limine.

Court Order / Findings

  • The Court held that whether the Trust's activities attract service tax under the Finance Act, 1994 and are exigible to GST under the CGST Act, 2017 are disputed questions of fact necessarily to be adjudicated by the authorities vested with power under the relevant statute, and declined to interfere at the show cause stage.
  • Relying on a catena of Supreme Court and Orissa High Court rulings, the Court reiterated that a show cause notice cannot be quashed in writ jurisdiction unless shown to be palpably without authority of law, and the Petitioner must file its response and raise objections before the authority.
  • On the pending application dated 12.12.2021 for supply of documents, the Court left it to the appropriate authority to decide the same in accordance with law.
  • The Court declined to interfere with the process of inquiry by the Competent Authority, and the writ petition was disposed of with the observation that it is open to the Petitioner to participate in the proceeding before the Opposite Parties.

Important Clarification

  • A show cause notice or summons issued under Section 70 of the CGST Act cannot ordinarily be quashed in writ jurisdiction unless it is shown to be issued palpably without authority of law; disputed questions on taxability must first be raised and adjudicated before the issuing authority.

Sections Involved

  • Section 67, Central Goods and Services Tax Act, 2017 – power of inspection, search and seizure exercised during the DGGI search.
  • Section 70, Central Goods and Services Tax Act, 2017 – power to summon persons to give evidence and produce documents.
  • Section 73(1), Finance Act, 1994 – provision under which service tax demand was raised in the show cause notice.
  • Section 69, Finance Act, 1994 – registration requirement for taxable service providers.

Decision – In Favour of

The decision is in favour of the Department. The Orissa High Court declined to quash the show cause notice and summons, holding the disputed taxability questions must be adjudicated by the authority, and disposed of the writ petition with liberty to the Petitioner to participate in the ongoing proceedings.

Related Case Laws

No related case laws on this specific issue are available on this site at present.

Case Details

  • Court: High Court of Orissa at Cuttack
  • Case No.: W.P.(C) No.5582 of 2022
  • Coram: Justice Jaswant Singh and Justice M.S. Raman
  • Date of Order: 21.04.2022

Link to Download the Order

Download the full judgment (PDF)

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