Case Details: Duakem Pharma Pvt. Ltd. vs. Deputy Commissioner of Revenue (2026) 39 Centax 16 (Cal.)
Judiciary and Counsel Details
- Om Narayan Rai, J.
- S/Shri Ankit Kanodia, Ms Megha Agarwal, Piyush Khaitan & Ms Tulika Roy, Advs., for the Petitioner.
- S/Shri Tanoy Chakraborty & Saptak Sanyal, Advs., for the Respondent.
Facts of the Case
The petitioner-assessee was issued a show cause notice calling upon it to explain why it should not be held liable for payment of tax on the ground that Input Tax Credit was found reversible in proportion to exempt supplies. In response, the petitioner-assessee submitted that it had purchased exempted goods and effected outward supplies of the same as exempt supplies and, therefore, no question of reversal of Input Tax Credit arose. It was contended that the basis of the notice proceeded on an assumption relating to proportionate reversal on account of exempt turnover and did not raise any dispute as to the nature or classification of the goods dealt in. The petitioner-assessee relied upon the premise that the exempted status of the goods was never put in issue in the show cause notice and that its explanation was confined strictly to the allegation contained therein. The matter was accordingly placed before the High Court.
High Court Held
The High Court held that the question as to whether the products or items dealt in by the petitioner-assessee fell under the exempted category was never put to the petitioner-assessee in the show cause notice and, therefore, could never have been answered by it. The Court held that what was under consideration before the adjudicating authority was only whether the petitioner-assessee was required to reverse Input Tax Credit on the ground that the exempt turnover claimed was more than what was projected, and not whether the goods themselves were exempt. It was held that the adjudication order had proceeded on a basis entirely different from that indicated in the show cause notice by effectively holding that the goods did not fall under the exempted category, and this issue was not part of the notice. Relying upon the principle embodied in section 75(7) of the CGST Act read with the West Bengal GST Act, the Court held that a show cause notice must clearly specify all grounds that the noticee is required to meet, and since the impugned order travelled beyond the notice, it was liable to be set aside.
