Supreme Court modifies High Court's Order by granting appropriate authority to issue fresh SCN

Last updated: 31 August 2021

Save Share

Quick Summary

The Supreme Court has overturned a High Court decision that quashed a Show Cause Notice (SCN) issued under the Jharkhand Value Added Tax Act, 2005. The High Court had found the SCN invalid. However, the Supreme Court clarified that the High Court's original ruling was based on a misinterpretation and that the core issue was the SCN's validity. The Supreme Court has now directed that a fresh SCN can be issued, continuing the original action, provided it complies with the JVAT Act and its rules.

Court :
Supreme Court of India

Brief :
In the State of Jharkhand and Ors. v. M/s. Bihar Sponge Iron Ltd. [IA No. 20324/2021 - Exemption from filing O.T dated August 9, 2021], the current appeal has been filed against the Order SLP(C)No. 14956 of 2020 dated October 23, 2019 by the Hon'ble Jharkhand HIgh Court ("Jharkhand HC") which quashed the Show Cause Notice ("SCN") on the grounds of it violating Section 70(5)(b) of Jharkhand Value Added Tax Act, 2005 ("JVAT Act") and not being in conformity with the provisions of it.

Citation :
IA No. 20324/2021 - Exemption from filing O.T dated August 9, 2021

In the State of Jharkhand and Ors. v. M/s. Bihar Sponge Iron Ltd. [IA No. 20324/2021 - Exemption from filing O.T dated August 9, 2021], the current appeal has been filed against the Order SLP(C)No. 14956 of 2020 dated October 23, 2019 by the Hon'ble Jharkhand HIgh Court ("Jharkhand HC") which quashed the Show Cause Notice ("SCN") on the grounds of it violating Section 70(5)(b) of Jharkhand Value Added Tax Act, 2005 ("JVAT Act") and not being in conformity with the provisions of it.

The Hon'ble Supreme Court allowing the current appeal by the Revenue observed that the contention put forth by M/s. Bihar Sponge Iron Ltd. ("the Respondent") that the Jharkhand HC decided the matter in favour of Respondents was not correct. The Apex Court noted that the contention is based upon incorrect reading of the Jharkhand HC's Order, observing that the judgment revolved around the factum of validity of the SCN, not more and not less.

Modifying the judgment put forth by the HC, the Supreme Court held that the HC should have kept the option open to the competent authority to issue a fresh SCN in conformity with the provisions of the JVAT Act and Rules.

Thus, directed the appropriate authority to issue a fresh SCN while being in continuation with action initiated in the Original SCN.

FAQ :

The original SCN was quashed by the Jharkhand High Court because it was deemed to violate Section 70(5)(b) of the Jharkhand Value Added Tax Act, 2005, and was not in conformity with the Act's provisions.

The Supreme Court modified the High Court's order. It found that the High Court had misinterpreted the situation and that the judgment should have allowed for the possibility of issuing a fresh SCN.

The Supreme Court has directed the appropriate authority to issue a fresh Show Cause Notice that is in conformity with the JVAT Act and Rules, continuing the action initiated by the original SCN.

No, the Supreme Court modified the High Court's decision. While the High Court quashed the SCN, the Supreme Court allowed for a fresh SCN to be issued.