M/S.Keshan Industries LLP vs. The Union Of INDIA

Held

The Court noted that after some arguments, the learned counsel for the Petitioner sought liberty to prefer an appeal against the impugned Order-in-Original dated April 25, 2026. The Petitioner submitted that some delay might have occurred in preferring the appeal and requested it to be considered sympathetically. The learned Senior Standing Counsel for CBIC stated that the Petitioner was at liberty to prefer an appeal, taking all available grounds. The Court, not wishing to comment on the merits of the contentions raised by the parties, granted liberty to the Petitioner to prefer an appeal within two weeks, along with a statutory pre-deposit and a delay condonation application. The Court directed that the appellate authority would consider the question of delay, taking into account the facts and circumstances, and if satisfied, proceed to decide the appeal on merits. The Writ Petition was disposed of with this liberty.

Facts

M/s. Keshan Industries LLP (Petitioner) filed a writ petition challenging an Order-in-Original No. 01/2026 dated April 25, 2026, passed by the Joint Commissioner of Central Tax (Adj), Medchal CGST Commissionerate (4th Respondent). The order pertains to the tax period April 2023 to July 2023. It confirmed a demand of Rs. 18,58,92,670/- under Section 74(9) of the CGST Act, interest under Section 50(3), and an equal penalty of Rs. 18,58,92,670/- under Section 74(9) read with Section 122(1)(viii) and Section 122(2)(b) of the CGST Act. The Petitioner also sought a declaration that Section 122 of the CGST Act is ultra vires and a refund of Rs. 2,00,00,000/- appropriated under the order. The Petitioner also sought an interim stay on recovery proceedings.

Key Issues

1. Whether the action of the 4th respondent in passing the impugned Order-in-Original No. 01/2026 dated April 25, 2026, for the tax period April 2023 to July 2023, confirming a demand of Rs. 18,58,92,670/- under Section 74(9) of the CGST Act, interest under Section 50(3), and a penalty of Rs. 18,58,92,670/- under Section 74(9) read with Section 122(1)(viii) and Section 122(2)(b) of the CGST Act, is illegal, without jurisdiction, in breach of natural justice, arbitrary, and violative of Articles 14, 19(1)(g), and 265 of the Constitution of India. 2. Whether Section 122 of the Central Goods and Services Tax Act, 2017, is ultra vires the Constitution of India for being an independent penal provision bereft of machinery provisions for proper officer, limitation, procedure, and quantification of penalty, thus being illegal and arbitrary, violating Article 14 of the Constitution of India. Petitioner's arguments: The Petitioner contended that the impugned order was illegal, without jurisdiction, arbitrary, and violative of constitutional provisions. They argued that Section 122 of the CGST Act is unconstitutional due to the absence of procedural safeguards. Revenue's arguments: The Revenue did not present specific arguments on the merits of the contentions raised by the Petitioner. They submitted that the Petitioner was at liberty to prefer an appeal against the impugned order.