[Opinion] Department Cannot Travel Beyond Show Cause Notice
- Blog|News|GST & Customs|
- 2 Min Read
- By Taxmann
- |
- Last Updated on 5 June, 2024
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Abhishek Goyal – [2024] 163 taxmann.com 68 (Article)
Introduction
In taxation law, issuance of show cause notice is sine qua non to afford an opportunity to the tax payer as per the principles of natural justice so as to represent and defend his case and submit all his arguments with documentary evidence if any, in support of his case.
In GST law, provisions of sections 73 and 74 mandates issuance of show cause notices before initiating proceedings specified therein. Recently the honorable Allahabad HC has delivered an important judgment in the case of Samsung India Electronics (P.) Ltd. v. State of UP [2024] 161 taxmann.com 205/[2024] 17 Centax 131 (All.) on the issue whether it is open for the department to travel beyond show cause notice and create a new ground in later stages of adjudication.
This article discusses the significance and principles emerging out of this judgment.
Facts
In this case the petitioner is a company engaged in export of information technology design and software development services to its overseas holding company. For providing IT services to its overseas holding company in Korea it procures various inputs, input services and capital goods and avails ITC of these inputs. The petitioner filed a claim for refund of unutilized ITC of CGST, SGST and IGST for the period of April 2019 to June 2019 which was sanctioned by the department. Thereafter the petitioner filed another claim for refund for the period July to Sept 2019 and Oct to Dec 2019. For these refund claims the department issued deficiency memos and show cause notices. The petitioner filed his reply, attended personal hearing and after due consideration the department partially sanctioned the refund and rejected a portion of it stating that the specific goods were not inputs but were capital goods.
The petitioner filed appeal against these orders which was dismissed. Aggrieved by the rejection orders, the petitioner filed writ petition before the honorable HC.
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