Rule 32(5) of the CGST Rules, 2017 —– Registered borrower and unregistered borrower -—- The petitioner prayed to declare proviso to Rule 32(5) to be arbitrary and discriminatory as it distinguishes between a registered borrower and unregistered borrower; to declare that Notification No. 8/2018-Central Tax (Rate), dated 25.01.2018 would apply to all the sellers of second hand motor vehicles and the reference to purchase price in the said notification would read as purchase price of defaulting borrower in case of sale of second hand repossessed vehicle; to set aside show-cause notice dated 12.01.2022 issued under section 74. The petitioner submitted that when the petitioner repossesses the vehicle from the borrower and proceeds to sell the same, proviso to rule provides that purchase value of the goods repossessed from an unregistered defaulting borrower for the purpose of recovery of loan or debt shall be deemed to be the purchase price of such goods by the defaulting borrower reduced as indicated for every quarter between the date of purchase and the date of disposal of repossessed vehicle or goods. The court observed that there is prima facie substance in the submissions and contentions raised on behalf of the petitioner.

Held that:- The Hon’ble High Court issued Notice returnable on 16.11.2022 and by way of ad interim relief, directed that the competent authority of the respondent shall not take any further steps pursuant to the impugned show-cause notice.