Nektar Therapeutics (India) Pvt Ltd V. Union of India

WP/22584/2023

AI Insights

Nektar Therapeutics (India) Pvt Ltd filed a writ petition challenging a show-cause notice and a final audit report issued by various respondents including the Union of India and its tax officials. The petitioner argued that the show-cause notice was issued without jurisdiction and beyond the statutory time, and contested the retrospective application of a specific GST notification. The respondents defended the issuance of the notice, asserting proper jurisdiction and adherence to procedural requirements. The court's decision emphasized the importance of pre-show cause notice consultation and upheld the procedural validity of the notice, allowing the petitioner to contest the substantive issues in the ongoing proceedings.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 743414 (HC-TELANGANA)
• Appeal Type: Others
• Pronouncement Date: 03-10-2023
• Assessment Year: misc
• Other Referred Cases: Raza Textiles vs. Income Tax Officer, Rampur, Union of India and others vs. Adani Ports Ltd., and another, Overready Industries India Ltd. Vs. The Customs, Excise and Service Tax Appellate Tribunal, South Zonal Bench, Chennai and others, Honda Siel Power Products Vs. Union of India, SQB Steels Ltd., vs. Commissioner of CUS., C.Dr. & S.T., Guntur, M/s.Radhasoami Satsang, Saomi Bagh, Agra vs. Commissioner of Income Tax
• Laws Referred To: Article 226 of the Constitution of India, CGST Act, 2017, IGST Act, 2017
• Result in Favour of: Revenue
• Court: HIGH COURT
• Department Lawyers: GADI PRAVEEN KUMAR; DOMINIC FERNANDES
• Assessee Lawyers: MOHD MUKHAIRUDDIN
• Keywords: Article 14 of the Constitution; Jurisdiction; Retrospective notification; Show cause notice; Writ of Certiorari; Statutory Time; GST Council Recommendations
• Section: 50; 74(1); 122(1)(b)

Judgement Text

"[ 3386 ] IN THE HIGH COURT FOR THE STATE OF TELANGANA AT HYDERABAD (Special Original Jurisdiction) TUESDAY, THE THIRD DAY OF OCTOBER TWO THOUSAND AND TWENTY THREE PRESENT THE HONOURABLE SRI JUSTICE P. SAM KOSHY AND THE HONOURABLE SRI JUSTICE LAXMI NARAYANA ALISHETTY WRIT PETITION NO: 22584 OF 2023 Between: Nektar Therapeutics (lndia) P!,t Ltd, Having.its registered office at 2nd Floor, Shyam Arihant Plot No.1-B-304 to 307110 and 11 Patigadda Road, Begumpet Hyderabad -500 003 Rep. by its Authorised Signatory ...PETITIONER AND 1 Union of lndia, Through Revenue Secretary Ministry of Finance, No(h Block New Delhi - 110001 Goods and Services Tax, Council 5th Floor, Tower ll, Jeevan Bharti Building, Janpath Road Connaught Place, New Delhi -1 10001 Deputy Commissioner of Central Tax, Circle Vlll, Audit-1 1 Commissionerate Sanvi Yamuna Pride-Kritika Layout Madhapur, Hitech City, Hyderabad 500081 4. Assistant Commissioner of Central Tax, Circle Vlll, Auditll Commissionerate Sanvi Yamuna Pride-Kritika Layout Madhapur, Hitech City, Hyderabad - 500081 5. Additional Commissioner of Central Tax, Audit- ll Commissionerate 1- 9818,120,21 Krithika Layout Hitech City, Hyderabad - 500081 6. Superintendent of Central Tax, Group -82, Circle -Vlll, Door No. 1-98/Bi20,21 Sanvi Yamuna Pride, Krithika Layout Madhapur, Hitech City Hyderabad - 500081 ...RESPONDENTS Petition under Article 226 of the Constitution of lndia praying that in the circumstances stated in the affidavit filed therewith, the High Court may be pleased to issue Writ, Order or Direction more particularly in the nature of Writ of Certiorari quashing the Show Cause Notice daled 2110712023 issued by Respondent No.5 and Final Audit Report dated 2711212022 issued by the Respondent No. 4 being without lurisdiction and beyond the statutory time and to declare that the Notification No.04/20t9 - IGST dated 30/09/2019 is only 2 J clarificatory and therefore retrospective in nature or in alternative, read down the Notification No. 04/2019 -IGST dated 30l0gl2o1g as arbitrary being contrary to the recommendation of GST council and violative of A(icle '14 of Constitution of lndia and issue any other appropriate orde(s) or direction(s) as may be deemed fit and proper by this Hon'ble Court lA NO: 1 OF 2023 Petition under Section 151 CPC praying that in the circumstances stated in the affidavit filed in support of the petition, the High Court may be pleased to stay all further proceedings arising out of the impugned Show Cause Notice dated 2110712023 issued by Respondent No.5 and issue any other appropriate order(s) or direction(s) as may be deemed fit and proper by this Honourable Co urt. Counsel for the Petitioner: SRI MOHD MUKHAIRUDDIN Counsel forthe Respondent No.1: SRI GADI PRAVEEN KUMAR (Dy. SOLlclToR GENERAL oF IND|A) Counsel for the Respondent No.2 to 6: SRt DOM|NtC FERNANDES, SC FOR CB|C The Court made the following: ORDER HONOURABLE SRI JUSTICE P.SAM KOSHY AND HON'BLE SRI JUSTICE LAXMI NARAYANA ALISHETTY WRIT PETITION No.225a4 of 2ol23 ORDER: ftter Hon'ble Sri Justrce Laxmi Naragana Alishettg) Heard learned counsel Sri Mohd. Mukhairuddin for the petitioner, Sri Gadi Praveen Kumar learned Dy.Solicitor General of India for respondent no.l and learned standing counsel Sri Dominic Fernandes for the respondent Nos.2 to 6 2. The instant writ petition has been filed by the petitioner seeking the following relief \"... to issue Writ Order or drrection more particularly in the nature of Writ of Certiorari quashing the Show-cause Notice dared 21.07.2023 issued by respondent No.S and Final Audit Report dated 27.12.2022 issued by the respondent No.4 being withour jurisdiction and beyond the statutory time ard to declare that the Notification No.O4l20lglcsT dated 30.09.2019 is only clarificatory and therefore, retrospective in nature; or in alternative, read down the Notification No.04/20I9-IGST dated 30.09.2019, as arbitrary being contrary to the recommendation of GST council and violative of Article 14 of Constitution of India and issue any other appropriate orders or directions as may be deemed fit and proper by this Hon'ble Court.\" 3. The brief facts leading to frling of writ petition are as under PSK,J & LNA,J W.P o 22584 of 2023 4. The petitioner is a Private Limited Company and is a wholly owned subsidiary of Nektar Therapeutics Inc., USA (for short, 'Nektar USAJ and has been providing various research and development related services exclusively to Nektar USA. On an earlier occasion, Sfr respondent issued show-cause notice No.O4 /2023-24 dated L7 .O4 .2023 to the petitioner. Petitioner challenged the said show-cause notice by way of rvrit petition No. 15871 of 2023 before this High Court. 5. The Hon'ble Division Bench of this Court vide order dated 23.06.2023 set aside the show-cause notice dated 17 .O4 .2023. However, it was made clear that proper officer shall hold consultation with the petitioner if he intends to issue fresh show cause notice i.e., pre show-cause notice consultation and all the contentions were kept open. One of the contentions raised in the said writ petition was that 5s respondent i.e., Assistant Commissioner was not the proper officer to issue notice and that the proper officer was, in fact, Additional or Joint Commissioner of Central Tax. 6. Consequent upon disposal of the above writ petition, fresh show-cause notice dated 21.07 .2023 was issued by the 2 --' / /7. PSK,J & LNA,J W.P.No.22584 of 2023 Additional Commissioner, Audit-ll Commissionerate. Hyderabad, calling upon the petitioner as to why:- i) An amount of Rs.29,21,92,744l- (IGST) (Rupees twenty nine crores twenty one lakhs ninety two thousand seven hundred and forty four only) being erroneous refund claimed as detailed supra should not be recovered from them in terms of section 74(1) of the CGST Act, 20L7 read with IGST Act, 2017; ii) interest should not be recovered from them on the amount demalded at (i) above under section 50 of the CGST Act, 2Ol7 read with Section 2O of the IGST Act, 20t7; iii) penalty should not be imposed on tJ:em on the amount demanded at (i) above under Section 122 (21(b) of the CGST Act, 2Ol7 read with Section 74 of the CGST Act, 2Ol7 and Section 2O of the IGST Act, 2017.\" 7 . The show-cause notice dated 21.07 .2023, referred to above, is now under challenge in the present writ petition. 8. The petitioner had challenged the said impugned notice under various grounds, including jurisdiction, non-issuance of pre show-cause notice consultation, non-conducting of pre- consultation hearing, etc. Accordingly, the same being violative of prirrfiples of judicial discipline was liable to be set aside. 3 PSK,J & LNA,J w.P No.22584 oJ 2023 9. lrarned counsel for petitioner would submit that primarily the Sth respondent does not have jurisdiction and has issued the impugned notice by wrongly assuming jurisdiction. Admittedly, consequent to the order in W.P.No. 15871 of 2023, the petitioner submitted reply. However, 5ft respondent issued impugned notice without considering the same and contrary to the orders passed by this Court in W.P.No. 15871 of 2023 aod prayed for quashing of the impugned notice. The learned counsel for petitioner had also placed reliance on the following decisions in support of his contention. il Raza Textiles vs. Income Tax OIIicer, Rampurl; ii) Uaion of India and others vs. Adani Drports Ltd., and another2; iii) tu/s.oveready lodustrles India Ltd. Vs. The Customs, E:rcise and Service Tax Appe[ate Tribunal, South Zonal Bench, Chennai and others3; iv) Ilonda Siel Power Products Vs. Union of Indiaa; v) SQB Steels Ltd., vs. Commissioner of CUS., C.Dr. & S.T., Gunturs; vi) M/s.Radhasoami Satsang, Saomi Bagh, Agra vs. Commissloaer of Income Ta:f (1e73) 1 SCC 633 (2002) l SCC s67 2015 SCC Online Mad 6065 2ozo (372) ELT 30 (Ail.) *,1'#r5'1\"'..-J.1'T n' 4 I 2 3 5 6 5 I PSK,J & LNA,J W.P.No.22584 of2O23 10. Per contra, learned standing counsel for respondents would submit that the impugned notice was issued by the proper officer, who has jurisdiction and authority to issue the same. He would further submit that this Court in W.P.No. 15871 of 2023 observed that proper officer of the respondent- Department, if he intends to issue fresh show cause noLice, shall hold consultation with the petitioner. l.earned standing counsel also referred to paragraph Nos.3 to 5 of the order in W.P.No. 15871 of 2023, dared 23.06.2023, which is re-produced for ready reference. \"3. Though the challenge has been made on various grounds, learned counsel for respondents No.2 to 6 fairly concedes to the contention advanced by learned counsel for the petitioner that respondent No.5 i.e., Assistant Commissioner, is not the proper oflicer as clarified by circular No.31/05/2018-GST dated 09.02.2018 issued by the Central Board of Excise ald Customs inasmuch as the proper oflicer would be Additional or Joint Commissioner of Central Tax. Therefore, he submits that the show cause notice may be set aside with liberty to the respondents to issue the same afresh by a proper offrcer. 4. At this stage, learned counsel for the petitioner submits that the show cause notice has been issued for recovery of refund earlier granted to the petitioner. The recovery is sought to be made on the ground that the refund was made erroneously. He submits that insofar refund is concerned, claim of the petitioner was afhrmed by the jurisdictional Customs, Excise & Service Tax Appellate Tribunal (CESTAT) PSK,J & LNA,J w ;'.No.225a4 oI2023 which order has attained hnality. Therefore, judicial discipline and propriety demands that respondent should be restrained from taking steps for recovery o[ the refund granted. 5. Having heard learned counsel for the parties, particularly the submission of learned counsel for respondents No.2 to 6, we set aside the show cause notice dated lZ.O4.2023 making it clear that proper officer shall hold consultation with the petitioner if he intends to issue fresh show cause notice i.e., pre show cause notice consultation. All contentions are kept open.\" 11. Learned standing counsel referring to the previ