Neo Classic Cruise And Tours (P) Ltd Vs Deputy Commissioner (Intelligence) (Kerala High Court)
SEO Title: Kerala HC Dismisses GST Writ by Neo Classic Cruise & Tours
Summary: The Kerala High Court dismissed the writ petition filed by Neo Classic Cruise and Tours (P) Ltd. challenging an order issued under Section 74 of the CGST Act, 2017. The company, which provides tour packages including cruises, had classified itself as a tour operator subject to a 5% tax. However, tax authorities issued a show-cause notice in July 2024, contending that the petitioner should have been classified as a houseboat service operator, subject to an 18% tax. The petitioner argued that invoking Section 74 was improper, as there was no fraud, willful misstatement, or suppression of facts. Additionally, it claimed that the order was issued unilaterally without verifying records, violating principles of natural justice.
The government, however, maintained that the order was appealable under Section 107 and that specific reasons for invoking Section 74 were detailed in the order. The High Court observed that the disputed classification required a factual determination, which could not be adjudicated under Article 226. The court also noted that while CBIC Instruction No. 05/2023 restricts Section 74 to cases involving fraud or suppression, the statutory appeal process must be followed. Concluding that the petition lacked merit, the court dismissed the case, directing the petitioner to seek appropriate remedies through statutory appeals.
FULL TEXT OF THE JUDGMENT/ORDER OF KERALA HIGH COURT
Petitioner challenges Exhibit-P5 order issued under Section 74 of the Central Goods and Services Tax Act, 2017 (for short, ‘the Act’).
2. Petitioner is a company engaged in providing tour packages like breakfast cruises, lunch and dinner cruises through the back waters. Various specialised packages are also offered by the petitioner. While classifying the services, petitioner classified itself as a tour operator. However, a show cause notice was issued on 07.2024, alleging that the petitioner ought to have classified itself as a ‘houseboat service operator’ taxable at the rate of 18% and had instead classified itself as a tour operator to be taxed at the rate of 5%. It was alleged that the said suppression was revealed only through an investigation. Consequent to a detailed objection filed by the petitioner as Exhibit-P2, the impugned order was issued under Section 74 of the Act, which is produced as Exhibit-P5.
3. Sri. Abraham K.J., the learned counsel for the petitioner, vehemently contended that neither the show cause notice nor the impugned order reflect any circumstance for initiating proceedings under Section 74 of the Act, as there is no fraud, willful misstatement or suppression. It was also submitted that Section 74 of the Act has been invoked solely for the purpose of avoiding the restriction on the period of limitation, and there is nothing to indicate any fraud, willful misstatement or suppression. It was further submitted that, the impugned order was passed without verifying the records and has proceeded in a unilateral manner, thereby violating the principles of natural justice.
4. Smt. Jasmin M.M., the learned Government Pleader, on the other hand, contended that the impugned order is appealable under Section 107 of the Act. It was also submitted that considering the specific factual findings of the assessing authority in the impugned order at paragraph 8 indicating the reasons for invoking of Section 74 of the Act, this Court ought not to exercise the jurisdiction under Article 226 of the Constitution of India.
5. On a consideration of the rival contentions, this Court notices that the impugned order refers to specific reasons for invoking the powers under Section 74 of the Act. The correctness or otherwise of those reasons cannot be gone into in this proceeding under Article 226 of the Constitution of India, as those are disputed facts. The normal remedy for an aggrieved person against an order issued under Section 74 of the Act is to prefer an appeal under Section 107 of the Act.
6. Though the learned counsel for the petitioner vehemently relied upon instruction No.05/2023 issued by the Central Board of Indirect Taxes & Customs, which indicates that proceedings under Section 74 of the Act can be invoked only when there is fraud, willful misstatement or suppression of facts to evade tax. Bearing in mind the Explanation to Section 74, I am of the view that the contentions now urged are matters which will have to be agitated in an appeal provided under the statute and not take recourse to the extraordinary remedy under Article 226 of the Constitution of India.
7. In such circumstances, I find no merit to exercise the jurisdiction under Article 226 of the Constitution of India and relegate the petitioner to pursue his statutory remedies.
The writ petition is dismissed with the above observations.