Facts of the Case

Geeta Ganesh Promoters Private Limited, a real estate developer, filed a writ petition (W.P.A. 13600 of 2023) seeking a declaration that Rule 42(3) of the CGST Rules, 2017 was ultra vires the Constitution, and also challenging a show cause notice dated 10.05.2023 issued under Section 73 of the West Bengal GST Act by the jurisdictional officer, which raised a demand relating to input tax credit reversal for a construction project. The Single Judge entertained the constitutional challenge to Rule 42(3) separately, but declined to interdict the show cause notice itself, directing the appellant to pursue a statutory appeal/reply instead. The appellant filed this intra-court appeal against the refusal to stay the show cause notice.

Issues Involved

  1. Whether the show cause notice dated 10.05.2023, issued under Section 73 of the WBGST Act, was so vague, unreasoned, or procedurally defective as to warrant being quashed at the threshold.
  2. Whether input tax credit availed until the issuance of the completion certificate for the promoted building required reversal.
  3. Whether the officer who issued the notice had pecuniary jurisdiction to do so.

Petitioner's Arguments

  • The show cause notice was devoid of reasons, unspecific, vague, unsigned, and lacked requisite details, relying on Marg ERP Limited v. Commissioner of Delhi GST, Apparent Marketing v. State of U.P., and Delta International v. Commissioner of Customs.
  • Input tax credit availed before the completion certificate was issued for the building should not be required to be reversed, citing Principal Commissioner v. Alembic Ltd.
  • The notice was also bad for lack of pecuniary jurisdiction on the part of the issuing officer, relying on CBIC Circular No. 31/05/2018-GST.

Respondent's Arguments

  • The show cause notice was issued under Section 73 of the WBGST Act in the statutory format, forwarded to the appellant's registered e-mail along with Form GST DRC-01 (a summary of the notice) and an accompanying report dated 08.05.2023 (which had earlier been shared with the appellant along with Form GST DRC-01A on 20.04.2023).
  • The report explicitly set out the amount, interest, and penalty the appellant was called upon to show cause against, and the appellant itself had responded to the earlier intimation without disputing that a formal notice would follow.

Court Order / Findings

  • The Court found the show cause notice was not vague or lacking particulars — it mentioned demand details, named the issuing Deputy Commissioner, and was accompanied by the underlying report explaining the basis for the demand.
  • The Court distinguished Marg ERP Ltd., Apparent Marketing, and Delta International on facts, noting that in those cases the notices genuinely failed to spell out the allegations, unlike the notice here.
  • The Court held that whether a show cause notice is vague or unintelligible cannot be decided by a rigid formula and depends on the facts of each case; here, the notice was adequately reasoned.
  • The single Judge's refusal to interdict the show cause notice was upheld, and the appeal was dismissed, with the appellant granted 15 days from receipt of the order to file its reply, after which the authority was to decide all raised contentions — including jurisdiction — in a reasoned, speaking order.

Important Clarification

The constitutional challenge to Rule 42(3) of the CGST Rules (governing reversal of common input tax credit) was not decided in this appeal — it remains pending as originally entertained by the Single Judge in the writ petition. What was decided is narrower: that this particular show cause notice was specific and valid enough to proceed to adjudication, and all of the taxpayer's substantive defences — including the ITC-reversal and jurisdiction arguments — must first be raised before the adjudicating officer.

Sections Involved

  • West Bengal Goods and Services Tax Act, 2017 — Section 73
  • Central Goods and Services Tax Rules, 2017 — Rule 42(3) (reversal of input tax credit) and Rule 142 (Form GST DRC-01/DRC-01A)
  • CBIC Circular No. 31/05/2018-GST — pecuniary jurisdiction of officers

Decision – In Favour of

Decided against the appellant on the narrow question of whether the show cause notice could be quashed at the threshold; the appeal was dismissed, and the appellant was directed to respond to the notice with all contentions kept open for adjudication.

Case Details

Court: High Court of Judicature at Calcutta  |  Case No.: M.A.T. 1185 of 2023 with I.A. No. CAN 1 of 2023  |  Coram: Hon'ble Chief Justice T.S. Sivagnanam and Hon'ble Mr. Justice Hiranmay Bhattacharyya  |  Date: 11 August 2023

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