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Case Summary: M/s Shree Kunj Bihari Infracon Private Ltd vs. State of U.P. and Others

Case No.: WRIT TAX No. - 1399 of 2024

Date of Order: September 12, 2024

Court: High Court of Judicature at Allahabad (Court No. 40)

Judges: Hon'ble Shekhar B. Saraf, J. and Hon'ble Manjive Shukla, J.

Facts of the Case: The petitioner, M/s Shree Kunj Bihari Infracon Private Ltd, received a letter from the Superintendent (Anti-Evasion) of Central Goods and Service Tax (CGST), Gautam Budh Nagar, dated March 13, 2024. The letter highlighted the alleged short payment of GST under the Reverse Charge Mechanism (RCM) for payments made to the Greater Noida Industrial Development Authority (GNIDA) during the Financial Years 2021-2022 to 2023-2024.

According to the CGST Department, the petitioner was liable to pay GST of ₹5.23 crore on payments amounting to ₹29.05 crore but had only voluntarily paid ₹50 lakh via DRC-03 on February 1, 2024. The Department advised the petitioner to make further voluntary payments without issuing a show cause or demand notice.

Submission by the Petitioner:

·        The petitioner argued that the Department’s letter, advising voluntary payments without any formal show cause or recovery notice, was unlawful. The petitioner contended that the procedure followed by the Department was unknown in law and amounted to pressuring the petitioner to make payments without following due process.

Submission by the Respondent:

·        The respondents, represented by counsel, could not provide any legal provision that authorized the Department to issue such advisory letters for voluntary payment without issuing a formal show cause notice, demand notice, or recovery notice.

Findings and Judgment of the Court:

·        The Court found that the Department had acted unlawfully by issuing a letter advising voluntary payments without the issuance of a show cause or recovery notice. The procedure adopted by the Department was not supported by any legal provision, and such letters amounted to pressuring the taxpayer.

·        The Court quashed the impugned letter dated March 13, 2024, and directed the authorities to refrain from issuing such letters in the future. The Court observed that the Department’s actions could be interpreted as pressure tactics, which were improper and not in accordance with the law.

Conclusion: The writ petition was allowed. The letter from the CGST Department advising voluntary payments without a formal show cause notice was quashed. The Court directed the authorities to follow proper procedures and avoid using pressure tactics in such cases.

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