M/S.Ark And Co. vs. The Union Of INDIA

Held

The Court did not delve into the merits of the contentions raised by the petitioner regarding the vires of Section 122 of the CGST Act or the jurisdiction of the respondents. Instead, upon hearing the arguments, the learned counsel for the petitioner sought liberty to prefer an appeal against the impugned order. The petitioner also sought to raise the plea of non-requirement of pre-deposit in terms of the amendment to the proviso to Section 107(6) of the CGST Act, vide notification dated 17.09.2025, as the impugned order pertained to penalty under Section 122. The Court granted liberty to the petitioner to prefer an appeal within two weeks, along with a delay condonation application. The appellate authority was directed to consider the plea of non-requirement of pre-deposit and the question of delay sympathetically. The writ petition was disposed of with this liberty.

Facts

The petitioner, M/s. ARK and Co., filed a writ petition challenging Section 122 of the Central Goods and Services Tax Act, 2017 (CGST Act), and an Order-in-Original No. 4112025-26-Adjn.(JC)-HYD-GST dated 12.06.2025, passed by the Joint Commissioner of Central Tax (4th respondent). The petitioner also challenged a Show Cause Notice No. 6412024-25 dated 10.06.2024, issued by the Additional Director/Joint Director, Directorate General of GST Intelligence (3rd respondent), for the tax periods 2017-18 (part), 2018-19, 2019-20, and 2020-21. The petitioner contended that Section 122 lacked procedural machinery and was arbitrary, and that the impugned notice and order were passed without jurisdiction as they predated the assignment of the proper officer function under Section 122 by Circular No. 254/11/2025-GST dated 27.10.2025.

Key Issues

1. Whether Section 122 of the CGST Act, 2017, is ultra vires the Constitution of India for being an independent section without machinery provisions regarding limitation, proper authority, and procedure for issuing show cause notices, calling for replies, and hearings, thereby being illegal and arbitrary, violating Article 14 of the Constitution? (Petitioner's contention). 2. Whether the action of the 4th respondent in passing the impugned Order-in-Original and the action of the 3rd respondent in issuing the Show Cause Notice for the periods 2017-18 (part) to 2020-21 are without jurisdiction, as they were passed prior to the assignment of the proper officer function under Section 122 by Circular No. 254/11/2025-GST dated 27.10.2025, rendering them void ab initio? (Petitioner's contention). The respondents did not record any specific arguments on these issues in the judgment.