Facts of the Case

Coco Latex Exports Pvt. Ltd., Alappuzha, filed a writ petition before the Kerala High Court seeking a declaration that Notifications No.3/2018, 53/2018, 54/2018 and 16/2020-Central Tax (Ext.P4, P5, P5(a) and P6), insofar as they curtailed the benefit of a customs/IGST exemption originally granted under Notification No.33/2018-Customs (Ext.P2), were unconstitutional and ultra vires Section 164 of the CGST Act, 2017 to the extent applied with retrospective effect from 23.10.2017. The petitioner also sought a mandamus directing refund of ITC/IGST availed within the scope of the original exemption, and a writ of certiorari quashing a notice dated 01.08.2023 (Ext.P9) issued by the Additional Director, Directorate General of GST Intelligence (DGGI), Kochi Zonal Unit, in connection with an ongoing investigation. The matter arose in the context of the petitioner's exports and the exemption/duty benefits it had claimed under the referenced customs and central tax notifications.

Issues Involved

  1. Whether the CGST Circulars/Notifications curtailing the exemption benefit, when applied retrospectively from 23.10.2017, are ultra vires Section 164 of the CGST Act and unconstitutional.
  2. Whether the show cause notice dated 01.08.2023 issued by the DGGI ought to be quashed at the writ stage.

Petitioner's Arguments

  • Sought a declaration that the impugned notifications, to the extent they curtail the exemption benefit originally granted and are applied retrospectively from 23.10.2017, are contrary to the objects of the CGST Act and beyond the scope of Section 164.
  • Sought refund of ITC/IGST availed within the bounds of the original exemption notification, unrestricted by the later retrospective amendments.
  • Sought quashing of the DGGI show cause notice dated 01.08.2023.

Respondent's Arguments

  • The order does not record substantive arguments advanced on behalf of the respondents, since after some arguments the petitioner's counsel opted to proceed by seeking leave to reply to the show cause notice rather than press the writ on merits.

Court Order/Findings

  • After some arguments, learned counsel for the petitioner submitted that the petitioner may be permitted to file a reply to the impugned show cause notice within two weeks, in lieu of pressing the vires challenge at the writ stage.
  • The Court disposed of the writ petition with liberty to the petitioner to file its reply to the show cause notice within two weeks, directing that all grounds regarding maintainability of the proceedings — including the vires challenge to the notifications — be raised before the concerned authority, who was directed to consider the reply and pass appropriate orders in accordance with law after affording a hearing.

Important Clarification

  • A challenge to the vires of notifications curtailing an exemption benefit can be raised as a ground before the adjudicating authority in reply to a show cause notice, rather than requiring independent writ adjudication, where the petitioner is agreeable to that course — leaving the substantive vires question open for the authority (and any future forum) to consider.

Sections Involved

  • Section 164, CGST Act, 2017 — power of the Government to make rules, including notifications, on the recommendation of the GST Council.
  • Notification No.3/2018, 53/2018, 54/2018 and 16/2020-Central Tax — amendments affecting the scope of the exemption originally granted under Notification No.33/2018-Customs.

Decision – In Favour of

Disposed of with directions; no finding on merits — the vires challenge and the exemption/refund claim were left open to be raised before the adjudicating authority in reply to the DGGI show cause notice, a purely procedural outcome.

Related Case Laws

No directly on-point case notes are currently published on this site.

Case Details

Court: High Court of Kerala at Ernakulam
Case No.: WP(C) No.31990 of 2023
CNR: Not available
Coram: Dinesh Kumar Singh, J.
Decision Date: 01-11-2023
Disposal Nature: Disposed of with liberty to reply to show cause notice within two weeks

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