Facts of the Case

South Eastern Coalfields Limited, a Public Sector Undertaking and subsidiary of Coal India Limited holding GST Registration No. AADCS2066EST003, challenged a third show cause notice dated 16.01.2023 issued under Section 73 of the CGST Act by the Additional Commissioner (Preventive), CGST, Raipur, regarding liability to deposit GST under reverse charge mechanism (RCM) on Chhattisgarh Development Cess and Environment Cess for the period July 2017 to July 2021. Two earlier show cause notices on the same subject, issued by the State GST authorities on 21.09.2021 and 21.02.2022, had both been dropped by orders dated 27.04.2022 and 13.06.2022 respectively.

Issues Involved

  1. Whether a third show cause notice on the same cause of action, after two earlier notices on the identical subject were dropped, is without jurisdiction and liable to be quashed in writ proceedings.

Petitioner's Arguments

  • Once the first and second show cause notices on identical allegations were dropped by the State authorities, there was no occasion for the Central GST authority to issue a third notice on the same cause of action; a person cannot be issued a show cause notice for the same cause repeatedly, relying on Godrej Sara Lee Ltd. v. Excise and Taxation Officer, and contended the alternative remedy bar would not apply where the proceeding is wholly without jurisdiction.

Respondent's Arguments

  • The earlier notices were issued by the State GST authorities, whereas the present notice was issued by the Central GST authority which had taken cognizance of the matter as early as 27.03.2021, on the basis of fresh information from an independent investigation; the earlier enquiry was not conducted properly, necessitating a fresh notice, and the petitioner had a remedy of filing a reply with all available defences.

Court Order / Findings

  • It was not specifically established that the second show cause notice was dropped because the authorities were satisfied with the petitioner's reply; rather, the State's case was that its proceedings were dropped since the Central GST authority had already taken cognizance of the same subject matter in 2021.
  • Where the present is not a case of violation of natural justice or of proceedings being wholly without jurisdiction, and the taxpayer retains the remedy of filing a reply to the show cause notice before the very authority that issued it, a writ court will decline to interfere merely because two earlier show cause notices on a similar subject were issued by a different (State) authority and dropped.
  • The Central GST authority was held to have the authority of law under Section 73 to issue the show cause notice in question, and no exceptional case was made out warranting interference.
  • The writ petition was dismissed, leaving the petitioner to respond to the show cause notice on merits.

Important Clarification

  • The bar against issuing repeated show cause notices for the same cause of action (as recognised in Godrej Sara Lee) applies where the same authority re-agitates an issue it has already dropped; it does not automatically extend to a fresh notice issued by a different authority (e.g., Central GST after State GST) that has independently taken cognizance based on its own investigation, and such a notice will not be quashed absent a demonstrated jurisdictional infirmity or natural justice violation.

Sections Involved

  • Section 73, CGST Act, 2017 - determination of tax not paid or short paid, other than by fraud.
  • Reverse Charge Mechanism (RCM) - liability to pay GST on specified inward supplies, here Environment and Development Cess.

Decision – In Favour of

The writ petition was dismissed, in favour of the Department, leaving the petitioner to respond to the show cause notice.

Case Details

Court: High Court of Chhattisgarh, Bilaspur
Case No.: WPT No. 85 of 2023
Coram: Justice Rakesh Mohan Pandey
Date of Order: 09.10.2023

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