The Himachal Pradesh High Court has dismissed the plea by the Himalaya Wellness Company challenging 15 pages show cause notice (SCN) demanding in admissible GST Input Tax Credit (ITC) worth Rs. 4.37 crores.
The bench of Justice Tarlok Singh Chauhan and Justice Sushil Kukreja has observed that merely because the petitioner has been served with the show cause notice would not mean that the same has been issued with the pre-conceived mind and in violation of natural justice. The proceedings are still at the stage of show cause notice, which has been assailed in the instant case. Therefore, the petitioner cannot raise this claim, that too, at this stage. Even otherwise, it would be premature on the part of the High Court to quash a show cause notice by invoking Article 226 of the Constitution of India.
The petitioner/assessee, Himalaya Wellness Company is a partnership firm incorporated under the Indian Partnership Act, 1932 inter alia, engaged in the supply of personal care and pharmaceuticals such as Medicaments, Beauty or Make-up Preparations, Preparations for use on the Hair Shampoos, Preparation for Oral or Dental Hygiene, Soap.
The petitioner entered into an arrangement with the Goods Transportation Agencies (GTA) for the transportation of goods into and out of the State of Himachal Pradesh.
The GTA services are taxable either under forward charge or reverse charge in terms of Notification No. 11/2017- Central Tax (Rate) dated 28.06.2017 and Notification No. 03/2022-Central Tax (Rate) dated 13.07.2022. The petitioner accordingly discharged GST and availed Input Tax Credit (ITC) on the GTA services received.
The Books of Account of the petitioner were taken up for auditing by the Central Tax Department, pursuant to which audit enquiry notice was issued to the petitioner pointing out various discrepancies.
The petitioner filed a reply to the enquiry notice along with all the relevant supporting documents. The Deputy Commissioner, Goods and Services Tax (Audit) Circle-Baddi, Central Revenue Building, Plot No. 19,, Sector 17-C, Chandigarh- 160017 issued Final Audit Report without considering the submissions made by the petitioner on the ground that the reply filed by it is untenable.
The petitioner received notice in Form DRC-01A dated 21.05.2024 directing it to discharge GST to the tune of Rs. 4,37,17,830/- alongwith interest and penalty by 31.05.2024. The petitioner filed a detailed reply on 30.05.2024 wherein it was submitted that the petitioner is not liable to discharge any outward liability.
The department issued show cause notice proposing to demand and recover the alleged inadmissible input tax credit (ITC) or Rs. 4,36,75,439, alleged short paid GST to the tune of Rs. 27,446/-, interest on non-payment of GST of Rs. 14,945/- and interest and penalty in terms of CGST Act on the demands proposed above. The show cause notice also proposed to appropriate the GST paid amounting to Rs.6,85,440 towards the demand proposed in the show cause notice.
Himalaya Wellness Company has challenged the show cause notice before the high court.
The department contended that writ petition is not maintainable that too against the mere show cause notice, which would be adjudicated upon completely by observing the principles of natural justice, as undertaken in the reply. Merely because the show cause notice has been issued by the respondents does not mean that the same has been issued with a pre-conceived mind.
The court noted that the department has served upon the petitioner a detailed show cause notice running into 15 pages, containing extensive details how it has arrived at a conclusion, sufficient enough to issue a show cause notice to the petitioner. Therefore, entertaining the petition would be annihilating a still born proceeding by going into the merits of the show cause notice.
Case Details
Case Title: M/s Himalaya Wellness Company Versus Union of India & Ors.
Case No.: CWP No. 9239 of 2024
Date: 08/05/2025
Counsel For Petitioner: G. Shivadass, Sr. Advocate with Ms. Shradha Rajgiri, Mr. Vipul Sharda and Mr. Raditya Katoch
Counsel For Respondent: Janak Raj Central Govt. Standing Counsel
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