Chiluka Ramchadra Reddy vs. The Union Of INDIA

Held

The Court held that the impugned Order in Original dated 20.11.2023 could not be upheld in the eye of law. The reasoning was that the assessing officer had proceeded to confirm a demand on similar grounds for the same tax periods (2016-17 and 2017-18) despite the appellate authority having previously held otherwise. The appellate authority had found that the petitioner had undertaken works exclusively for Government Departments, which were exempted under Mega Exemption Notification No. 25/2012-S.T. Furthermore, the petitioner was eligible for Small Scale Industries (SSI) exemption under Notification No. 33/2012-S.T. for works executed during 2017-18, and the value of clearances for both periods was within the threshold limit for SSI exemption. The appellate authority had concluded that the demands were not tenable as the petitioner had not rendered any taxable service and was not liable to file statutory returns. Therefore, the Court found it evident that the impugned proceedings were initiated for the same tax period in respect of which the petitioner had succeeded at the appellate stage. Consequently, the impugned order-in-original dated 20.11.2023 and the garnishee notice dated 13.01.2026 were set aside. The Writ Petition was allowed.

Facts

The petitioner, Chiluka Ramchandra Reddy, challenged an Order in Original No. 4212023-2024-Adin (ADC)-ST dated 20.11.2023, which confirmed a demand of Rs. 72,03,798/- along with interest and penalties. This order pertained to the tax periods 2016-17 and 2017-18 (up to June 2017). The petitioner contended that the demand for these periods had already been adjudicated and set aside by an appellate order dated 12.08.2024, which also ordered a refund of deposited amounts. Subsequently, a garnishee notice dated 13.01.2026 was issued to recover alleged dues based on the impugned order. The petitioner argued that the impugned order was passed without proper service of show cause notice and without affording an opportunity of hearing, violating principles of natural justice.

Key Issues

1. Whether the respondent department can initiate independent recovery proceedings for the same tax periods (2016-17 and 2017-18) when an earlier adjudication for these periods was set aside by the appellate authority in favour of the petitioner? 2. Whether the Order in Original No. 4212023-2024-Adin (ADC)-ST dated 20.11.2023, which confirmed a demand of Rs. 72,03,798/-, is null and void, illegal, and arbitrary, particularly in light of the findings of the appellate authority? Petitioner's Arguments: The petitioner argued that the impugned order and subsequent garnishee notice were illegal as the demand for the same tax periods had already been adjudicated and set aside by the appellate authority. They further contended that the impugned order was passed without proper service of show cause notice and without affording an opportunity of hearing, violating principles of natural justice. Respondents' Arguments: The respondents justified the impugned proceedings by stating they were independent and based on a show cause notice dated 18.10.2021, to which the assessee did not reply. They claimed the adjudicating authority proceeded based on available records, confirming a demand of Rs. 72,03,798/- under Section 73(1) of the Finance Act, 1994, along with interest and penalties, citing suppression of taxable receipts and non-compliance. They also relied on Section 87 of the Act for recovery proceedings.