Facts of the Case

The petitioner, Bedi and Bedi Associates, claimed exemption from payment of Goods and Services Tax (GST) on outward supplies made to a Polytechnic (Vocational Institution) under Notification No. 12/2017-Central Tax (Rate) dated 28.06.2017.

During audit proceedings, the GST department sought clarification regarding the exemption claim. The petitioner furnished its response; however, the department issued Final Audit Observations (ADT-02) concluding that the exemption was wrongly availed since supplies to a Polytechnic did not qualify as supplies to an “educational institution.”

Initially, a tax demand of ₹49,16,111/- was raised. Subsequently, corrigenda dated 25.08.2023 and 28.08.2023 were issued revising the tax demand. Thereafter, a Show Cause Notice (SCN) dated 11.09.2023 under Section 74 of the CGST Act, 2017 was issued demanding ₹1,79,56,485/- along with interest and penalty.

The petitioner approached the Delhi High Court challenging the corrigenda and SCN without replying to the SCN.

Issues Involved

  1. Whether corrigenda issued to audit observations require fresh approval from the Monitoring Committee.
  2. Whether the Show Cause Notice issued under Section 74 of the CGST Act, 2017 is liable to be quashed on the ground of lack of approval of corrigenda.
  3. Whether correction of tax computation through corrigenda is legally sustainable. 

Petitioner’s Arguments

  • The corrigenda dated 25.08.2023 and 28.08.2023 were not approved by the Monitoring Committee, rendering them invalid.
  • Consequently, the Show Cause Notice issued under Section 74 CGST Act based on such corrigenda was liable to be quashed.
  • The demand raised through corrigenda was substantially enhanced without proper authorization.

Respondent’s Arguments

  • The corrigenda were placed before and approved by the Monitoring Committee in its meeting dated 17.08.2023.
  • The corrigenda merely corrected computational errors in tax quantification, and did not alter the fundamental basis of the demand.
  • Therefore, the SCN was validly issued under Section 74 of the CGST Act.

Court’s Findings

  • The Court observed that the basis of the demand remained unchanged, i.e., denial of exemption under Notification No. 12/2017.
  • The corrigenda only modified the quantification of tax liability, which may not necessarily require separate approval if arising from computational correction.
  • The Court accepted the respondent’s submission that the corrigenda were, in fact, approved by the Monitoring Committee.
  • The petition was based on a factually incorrect premise, and therefore, no ground for interference was made out.

Court Order

  • The Delhi High Court dismissed the writ petition.
  • All pending applications were also disposed of.

Important Clarification

  • Corrigenda correcting tax computation do not necessarily require fresh approval, especially where the underlying basis of demand remains unchanged.
  • Courts will not interfere where the challenge is based on incorrect factual assumptions.
  • Filing a writ petition without responding to SCN may weaken the case, particularly in tax matters.

Sections / Provisions Involved

  • Section 74 of the Central Goods and Services Tax Act, 2017
  • Notification No. 12/2017-Central Tax (Rate) dated 28.06.2017

Link to download the order -  https://delhihighcourt.nic.in/app/showFileJudgment/59521112023CW150652023_161810.pdf

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