High Court · 2025

Petition under Article 226 of the Constitution of lndia praying that in the circumstances stated in the affidavit filed therewith' the High Court may be pleasedtoissueawrit,orderordirection,moreparticularlyinthenatureofaWrit of Certiorari, calling for records and quashing the order in GST Form DRC-07 bearingorderNo.zD36o225o885735dated28.02.2025issuedbyRespondent No.2onthegroundthatthesameiswithoutjurisdiction,arbitrary'highhanded and violative of Articles 14 and 265 of the deems fit and proper in the facts and circumstances of the case' lA NO: 2 OF 2025 Petition under section 1s1 cpc praying that in the circumstances stated in the affidavit filed in support of the petition, the High court may be preased to stay all proceedings incruding recovery proceedings pursuant to the order in Gsr Form DRC-07 bearing order No. zD36o22soBB5735 dated 28.02.202s issued by Respondent No.2. Counsel for the petitioner : SRI P.S.S.KAILASH NATH Counsel for the Respondents No.1,2&4 : SRI SWAROOP OORILLA, Spt.Gp FOR STATE TAX counsel for the Respondent No.3:sRI DoMlNIc FERNANDEs, Sr.SC FoR CBIC The Court made the foltowing: ORDER THE HON'BLE THE CHIEF IUSTICE SRI AIARESH trUMAR SINGH AND THE HON'BLE SRI IUSTICE G.M.MOHIUDDIN Writ Petition No.24098 of 2025 Order Heard Mr. I(ailash Nath P.S.S., learned counsel for thc petitioner; Mr. Swaroop Oorilla, learned Special Gor.crnment Pleader of Statc Tax appearing for tespondents No.1, 2 & 4 and N{r. Dominic Fernandes, Icarncd Seniot Standrng Counsel for Central Board of Ind-uect f'axes and Customs (CBIC) appeadng for respondent No.3.

2. Petitioner-companv is a registeted tax payer har.ing GSTIN No:36AASCS5503K1Z$7. It has been subiected to the proceedings under Section 73 of the Central Goods and Serwices 'l-ax Acq 2017 (fot short 'CGS'f Act) for the financial year 2020-2021 uide show cause notice dated

27.1I.202.4, issucd by Assistant Commiss.ioner (CD, Nampally-1 Circle, Hyderabad, in Form GST DRC-01. I { 2 Thereaftcr, the order-in-original was passed on 28.02.2025, by the Assistant Commissioner (ST) GST, Ibids Dir.ision, Hyderabad, respofldent No.2, rmposing liabLliq, of Rs.96,30,225.26 ps. Pcritioner has assailed it rn the instant writ petition on the ground that investigation, in respect o[ availment of Input Tax Ctedit (IfC) by the petrtioner on inr.oices, without receip t o I goods or serwices from certain suppliers, w'as conducted ar-rd concludcd by respondent No.3- Additional Director, Dilector General of GST Intelligence pGGI), under the provisions of Sections 74(5) and I a$) of the CGS'I' .\ct and the corrcsponding provisions of Telangana Goods and Services Tax Act, 201.1 (for short 'the TGS-I' Act'), after the petitioner paid GST oF Rs.1,50,85,580/- aiong rvith interest of lls.41,33,6821- ard penalry of Rs.22,62,838/-, and submitted letters dated 29.12.2022, 08.03.2022,

01.12.2023 and 02.02.2024, to the Principal 3 Commissioner, Hyderabad CGST Commissionerate, request-ing hrm to close the proceedings without issuance of any show cause notice" Letter dated 13.02.2024, issued by the Addiuonal Director, DGGI, at paru 3 reads as under: "Accordingiy, the subjcct casc ptoceedings against M/s. Sensation In Fracon Pvt. I-td. (36AASC85503K1ZQ\! were concluded under the provisions of Secuon 74(5)/74(6) of CGST Act, 2011 and corresponding provisions of 'Ielangana CIST Act, 2011 . In this conneclion, it is also informed that conclusion of case proceeclings in the subiect case is limited to the ITC received ftom the above mentioned suppliers and that too thc amount mentioncd onlv. With regard to ITC availed on the basis of other invoices or suppliers, the junsdicuonal officers may take action as deemed fit in case of any irregularitics. 'fhe above conclusion is without prejudice to anv action tl're taxpayer t I '1 4 is [ablc undet the CGS-I' Act/T'elangana GST Act or any other Act in lorce.,,

3. Learned counsel for the petitioner subrnits that though the investigarion rclaring ro rhe said invoices for thc period November, 2021, to Jantary, 2024, was closed, the State Tax authority, respondent No.2, issued show causc noLice dated 04.08.2022, for thc subject period April, 2020, to March, 2021, and proceeded ro imposc thc above tax liability along with penalry without appLication of mind Thcrefore, the peutioner has approached this Court. 4 Learned counsel for the petitioner has taken a piea that the show cause no[ice was flot served on the petitioner by post or email but merely uploaded on the Additional Notices and Orders tab of the GSTIN portal. Therefore, he was not aware of the shou, cause notice dated 01.08.2022. The impugned proceeclings have thercfore, been ass ailed. \

5. Leatned Special Government Pleader for State Tax has straight away drawn thc attention of this Coutt to Section 169(1)(d) of the CGST Act and submitred that any decision, order, summons, notice of other communication under the CGST Act or the nrles made thereunder would be treated to be selved by any of the rnethods stated in Clauses (a) to (Q. Clause (d) specifrcally provides fot making it available in common portal' Sub-section (2) thereof provides that evely such decision, order' summons, norice or afly communication shall be deemed to have been served on the date on which it is tendered ot published or a copy theteof is affi'red in the manner provided in sub-section (1). Sub-secnon (3) also provides that such communication is deemed to have bcen received by the addressee on expiry of the period normally taken by such post in transit unless the contrary is proved' { 6 Therefote, the uploading of the show cause notice on the common portal amounts to service on the petitionct/asses s ee.

6. It is submitted that the petirioner has not participated in the proceedings pursuant to the shorv cause rrotice dated 04.08.2022, and instead assailed tl.rc order_in_ original dated 28.02.2025, on the grounds o[ violarion of principles of natural justice and nofl-applicatlon of mincl in failing to dcal with the closure of rnvcsngation by Addiuonal Director, DGGI, as per lerrer d.ated. 13.02.2024 He submrts that the petitioner ought to har.e avarled the appellate remedy, insread of approaching this Court, I whereby the periuoner's claim of having pardy paid GS1, along with interest and penalty against inr.oices for availment of ITC from the suppliets, would have been duly scrutrnized on the basis of the records. Therefore 7 learned counsel has opposed the prayer for intetference in the impugned order-h-onginal da ted 28.02'2025

7. We have consiclered the submissions of learned counsel for the Partics

8. We have also taken note of the relevant documents and pieadings placed on record hereinabove'

9. On a mere perusal of the letter dated 13'02'2024, addressed by the Additional Director, DGGI, to the Principal Commissioner, Flyderabad CGS'I' Commissionerate, in respect of the inves rigation conducted against the petitioner for availment of ITC \ { t based on invoices wirhout receipt of goods or setvices from the main suppliers, it would appear that Part payment of the tax, penalty and interest under DRT-03 has been made from 23.1t.2021 onwards LiJ.l 06'01'2024' 8 It, however, does not appear that the _inr.oices agains t rvhich thc investigation was conducted by the Adcliuonal Dircctor, DGGI, also fall within rhe tax period Apri1, 2020, to March, 2021, whicb is the subjcct marter of the shorv causc notice dated 04.08.2022, or for subsequenr periods. T'his rvas a matter to be scrutinized on anv snch plea raised bv the peritioner before the asscssing officer. The lteuuoner, however, has not parucipated in the proceedings despite uploading of the show cause nodcc on thc GSTIN potal. Order-in-otigrnal was based on the assessmcnt irnposing tax and penalty to the tune of ks.1,05,93,246/-. Jn such circumsrances, tl.ris Courr, in excLcrsc of writ jurisdiction, is not required ro scrutinize I I whcther the ptoceedings undef the show cause nofice I dated 04.08.2022, were ovedapping the proceedings under the investigation conducred by Additional Direcror, DGGI, as indicated above. Ir was the durv o[ the 9 petitioner to appear and file hls teply before the assessing authoriry, respondent No.2, questioning the same. Even othetwise, Ietter dated 1,3.02.2024, of the Additional Di-rector, DGGI, cleady mentioned at pata 3 quoted above, that conclusion oI the case proceedings in the said case is Lirnited to the ITC rcceived from the above mentioned suppliers and that too, For thc abovc mentioned amount only. !7ith rcgard to the ITC avatlcd on the basis of other invoices from other suppliers, the jurisdictional officers may take action as deemed fit in case of any irregularities. The conclusion recordcd b-v thc Additional Dtrector, DGGI, rvas without preiudicc to any \ action against the petitioner for his iiabiliry under the CGST Act or TGST Act ot any other Act in force. : :10: :

10. 'fGSl' Act provides for remedy of appeal under Section 107. 'fhe peririoner, instead of availing the remedy of appcal, has straight away rushed to this Court.

11. Learncd counsel fot the petitioner has placed before this Court a copy of the rccent decision rendered by tl.re Apcx Court in M/s Armour Security (India) Ltd. V. Commissioncr, CGST, Delhi, East Commissionerate & anr. fSpeciai Leavc Petirion (C) No.60c)2 of 2025 judgment datcd 14.08.2025]. He has specificaliy drarvn thc attention o[ tiiis Court to thc conclusions at paras 96 I I and97 thercof. 12 We arc benefited by the observarions made by the Apex Court that in respect of instances u,here parallel I l proceedings are being initiated by Central and the State Tax administrarions, the action must be iniuated by the tax administratton to which the taxpayet is assigned under

1. :: 11:: Section 6(2) of the GST Act. The conclusions at Clause (.rr) of para 96 quoted hereunder are gcrmane to issue at hand: "'Ihe exprcssion "initiation o[ proceedings" occurring in Secuon 6(2)(b) refers to the formal commencemcnt of adjudicatory proceedings by way o[ issuance of a show cause notice, and does not cncompass thc issuance of summons, or thc conduct of any scarch, or scizure etc."

13. The gurdelines prescribed under Para 97, specifically Clause (b), provide that where an assessee becomes awarc that the matter being inquued into or investigated is already the subject of an inquiry or investigation by any authority, the assessee shall forthwith inform, in wdting, the authority that has iniuated subsequent inquiry or lnve s 'gatlon. :iI2tl

14. Thus, in the pre sent case, the invcstigation undertaken b), the Additional Direcror, DGGI, did not amount to commenccment of proceedings. Moreovcr, the petitioner/ asses s cc was requrcd to inform thc same, in wdting, to rhc authorifi: flru, has initiatcd thc subsequent mqul1l/ or lnves trgatlon

15. In the instant casc, a shorv cause notice lor initiatron of proccedings under Scction 73 of the CGST Act were issued br. thc Statc 'I'ax authority, where the peritioner ought to havc appearecl and explained its posirron, which it has failcd to do I

16. In the aforesaid facts and circumstances of the casc, we do not find any reason to interfere with the impugned otder-in-original datcd 28.02.2025 passed by respondent No.2. Howe\rer, the petitioner may be at liberry to avail the appellatc remedy as is permissible undcr lau., I I : :13::

17. 'I'he instant Writ Petirion is, accordingly, dismissed. No costs

18. Lct it be made clear that wc have not made any observations on the merits of the case of the parries. ,\s a sequel, misceilaneous petitions, pending if anv, s tand closcd. SD/ D ABDULLAH KHAN ISTANT REGISTRAR /ITRUE COPY// SECTION OFFICER To, {

1. One CC to SRI P.S.S.KAILASH NATH P S S Advo ate [OPUC] 2. One CC to SRI SWAROOP OORILLA, SPL.G.P for State Tax. [OPUC] 3. One CC to SRI DOIVINIC FERNANDES, Senior Standing Counsel for CBIC loPUCl

4. Two CD Copies. BSK LS _--:-::_' ,- 1:: - ':. .YI zl sEP rui * l)1:.. HIGH COURT DATED:1 810812025 ORDER WP.No.24098 of 2025 DISMISSING THE WRIT PETITION WITHOUT COSTS 6 1Lqlx