M/S Divyashakti Chemicals vs. The Additional Commissioner Of Central Tax

The petitioner's GST registration was cancelled on 28.12.2019. The show cause notice bearing No.13812024-25 was issued by' respondent No. 1 on 23.09.2024 alleging wrongful availment of Input Tax Credit without actual supply. 'Ihe proposed demand and penalties rvere issued under Section 122(1XiD and 122(l)(r'ii) of the Central Goods and Services Tax Act, 2017 (hereinaftei relerued 1o as, "the Act"). The order- in-original confitming the demand was passed on 18.03.2025 and DRC-07 is dated 20.03.2025. In the pr€sent proceeding, the petitioner has assailed the order-in-original dated 1(t.12.2025 arising out of the show cause notice dated 19.06.2025 lbr the same period of January'2019 to November 2019 alleging that on identical allegations, penalty was proposed and confirmed under Sectiorr 122(1)(ii) and 122(1Xvii) of the Act. Against the order-in-original dated 18.03.2025, the petitioner has already filed a statutory appeal on 2l\.06.2025, which is pending. Against the order-in-original dated 10.12.')-025 , the present writ petition has been filed, inter alia, on the ground thlt it is in teeth of Section 6(2)(b) of the Act. The petilioner has also taken the ground of non-issuance of mandatory sholv cause notice under Rule 142(lA) of the Central Goods and Services T'ax Rules, 2011 . Th.e petitioner has further assailed tl-re impugned order-in-original on the ground that it .E:-.:rss!-,1s:ry 3 would be a clear case of duplication and abuse of process of law and also in violation of the principles ofnatural justice

In the second proceedings, it is not in dispute that the petitioner has not participated. In the decision relied upon by the petitioner in the case of Armour Security (India) Ltd. v. Commissioner, CGST, Delhi Eastr, the Apex Court has, under the guidelines laid down at paragraph 97 at sub-paragraph (b), observed that when an assessee becomes aware that the matter being inquired into or investigated is already the subject of an inquiry or investigation by another authority, the assessee shall lorthwith inform, in writing, the authority that has initiated the subsequent inquiry or investigation. Paragraph 96 summarises the conclusion on the issue of parallel or overlap proceedings' Sub-paragraph (viii) thereof prescribes that where any two proceedings initiated by the Department seek to assess or recover an identical or a partial overlap in the tax iiability, deficiency or obligation arising from any particular contravention, the bar of Section 6(2)(b) would be irnmediately attracted. Sub-paragraph (x) prescribes the twofold test for deterrnining whether a subject matter is "same" it entails, first, determining if an authority has already proceeded on an identical ' (2025) 33 centax 222 (sc)

Section 161 of the Act, on the other. hand, prescribes the rcctification of errors apparent on the face of record b1 the authority u'ho has passed or issued any decision or order or notice or certiflcate or any other document, ra,hich is apparent on the face o1 record in such decision or order or notice or cerlificate or any other doctment, either on its own motion or w.here such error is brought to its notice by any officer. I'he time limit for seeking rectification is six rrouths from the date ofissue ofsuch decision. order or notice.

In the instant case, rival submissions have been made on the question of overlap and the duty of the assessee to brinE. it to the notice of the proper officer the overlap in the tax liability. deficiency or obligation arising from any particular contravention. In the present case, the petitioner has not participated in the proceedings. f herefore, it has failed to bring it to the notice ol the assessing authrrity about the proceedings dated 19.06.2025. 6. On the part of the respondents, it is contended thar in determining whether the subject matter is same. though the authority may have ::-:1a5!!ffi7 5 proceeded on allegations of contravention ol Section 122(1)(ii) and 122(1Xvii) of the Act which were alleged in the previous proceedings, but the second test that the demand or relief sought is identical, is not existing in the present case. Therefore, strictly speaking, the plea of overlap should not arise in the present case. Moreover, since the petitioner has already approached the appellate authority against the order-in-original dated 18.03.2025, the petitioner may not have any difficulty in approaching the appellate authority, as the appeal period is not yet exhausted. Furthermore, the appellate authority would have the benefit of comparing both the orders-in-original imposing demand upon the petitioner for the alleged contraventions.

Learned counsel for the petitioner submits that since the GST registration of the petitioner has been cancelled with effect from 28.12.2019, the petitioner may not be able to make the pre-deposit against the impugned order-in-original before the appellate authority and a direction may be issued to waive the same.

We have considered the submissions of the leamed counsel for the parties

The rival points ol law are asserted by either c I the parries. On the one hand, the petitioner has failed to participate in the second proceedings to bring out the alleged overlap in the proccedings rvith the earlier proceedings vide the order- in_original dated 1t.03.2025. While applying the twofold test. the first part ,iay be satisfied. but the second may not be attracted, as the demand does not appear Lo be identical to the flrst imposition of liability. The petitioner has contended, relying upon the observations made by the Apex Court at paraEraph 97(b) ol the decision in Armour Security (India) Lttl. (supra), Lhzt if the aforesaid authorities are not coruplying w.ith thc said guiclelines. it u,ould be open tbr the taxable pcrson to file a u,rit petition undcr A.ticle 226 of rhe Constitution of India.

In the facts and circumstances noted above, rve are of the considered opinion that the petitioner may seek rec.illcation ol the second proceeding under Section 1 6l of the Act, since ,he period of six months has not expired from the date of issuance ofthe ,rrder_ in_original d,ated I0.12.2025. If rhc pctirioner. is aggric,,,ed b1. the order_ in_original so passed. it may avail the remedy as is pennissible in larv also before the appellate authority against the order-in-original and the rectificatio, order. If the rectification application is filed by the peritioner within a : -::€Y'""7 7 period of two weeks, the proper officer would entertain and endeavor to decide it in accordance with law within a period of three weeks thereafter after giving an opportunity of hearing to the petitioner as well. Let it be [rade clear that we have not made anv comments on the merits of the case of the parties.

The writ petition is accordingly disposed of. There shall be no order as to costs. Miscellaneous applications pending, if any, shall stand closed. B. REK //II ASSISTAN ISTRAR SECTION OFFICER ANI To,

The Joint Commissionerof-9:ryef Tax (Appeats_t),, 7th Ftoor, GST Bhavan, Basheerbagh, Hyderabad_ 5OO 004 4 The Additionar Director,, o/o. Directorate Generar of GST rnterigence. Visakhapatnam Zonat Unil ^D^oo, rrro zali a_fl ' br.yrough,-e""io" ril"i"iv Theatre, Visakhapatnam_ S3O020 5 The secretary, union of rndia,, Ministry of Finance, North Brock, New Derhi_ '1 10 001 6 The commissioner, centrar Board of rndirect raxes and customs, GST poricy Wing, New Dethi.

One CC to Sri MD Shabaz, Advocate tOpUCI B One cc to sri Dominic Fernandes lsenior standing counser for cBrc) topucl

One CC to SC for Central Government[OpUC] '

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