Supreme Court Sets Aside HC Order Which Quashed Notice Under Section 130 CGST Act: ‘Premature For High Court To Opine On Tax Evasion’ 

The Supreme Court in the case State of Punjab Versus Shiv Enterprises observed and has set aside the order passed by the Punjab and Haryana High Court, wherein stating that it was “premature” on the part of the High Court for quashing a show-cause notice which is being issued under Section 130 of the Central Goods and Service Tax Act, 2017 by invoking the Article 226 jurisdiction. It has been noted by the Supreme Court that there were allegations about evasion of tax and hence it was premature on the part of the High Court to opine anything on weather their being any evasion of the tax or not. The said court is to consider same in an appropriate proceeding for which the notice under Section 130 of the Act was being issued. The bench comprising of Justice MR Shah and Justice CT Ravi Kumar observed and has set aside a judgment and order passed by the High Court of Punjab and Haryana at Chandigarh wherein the High Court in the case had set aside the order of detention of goods or vehicle which is being issued by the Assistant Commissioner State Tax, and also the notice which is issued under section 130 of the Central Goods and Service Tax Act, 2017. 

The Factual Metric of the Civil Appeal 

The State preferred the appeal against the judgement of the High Court dated 04- 02-2022, wherein the court set aside the order of detention of goods/vehicle issued by the Assistant Commissioner State Tax, and a notice has been issued by the court under section 130 of the CGST Act, 2017. Therefore, it is the stand of the State’s that the original writ petitioner was being called upon to show cause within 14 days from the date of receipt of the said notice, as to why the goods which being in question and the conveyance being used to transport such goods shall not be confiscated under the provisions stated under Section 130 of the Punjab GST Act, 2017 and the IGST Act, 2017 and CGST Act, 2017 and why the tax, the other charges and the penalty which is being payable in respect of such goods and the conveyance shall not be payable. The court also noted that in the show cause notice, there being a special allegation with respect to evasion of duty, which was yet to be considered by the appropriate authority on the original writ petitioners who are appearing the appropriate authority, thus, who issued the notice. The High Court entertained the writ petition filed against the show cause notice and has set aside the show cause notice issued under section 130 of the CGST Act, 2017 in exercise of powers under Article 226 of the Constitution of India. Order of the Supreme Court: The bench headed by Justice Shah in his judgment held that, it being premature for the High Court to opine anything on whether there was any evasion of the tax or not. Therefore, the court is to consider the same in an appropriate proceeding for which the notice under section 130 of the Act was issued. Therefore, the court is of the said opinion that the High Court has materially erred in entertaining the writ petition against the show cause notice and quashing and setting aside the same. Accordingly, the court set aside the impugned judgment and order passed by the High Court to the extent quashing and setting aside the notice dated 14-9-2021 which is being issued under section 130 of the CGST Act, 2017 and the court remanded the matter back to the appropriate authority, who had issued the notice.