Judgment
tN THE HIGH COURT FOR THE STATE OF TELA}&ANA AT HYDERABAD (Special Original J urisdiction) WEDNESDAY, THE EIGHTEENTH DAY OF FEBRUARY TWO THOUSAND AND TWENTY SIX PRESENT THE HONOURABLE THE CHIEF JUSTICE APARESH KUMAR SINGH AND THE HONOURABLE SRI JUSTICE G.M. MOHIUDDIN WRIT PETITION NO: 4806 OF 2026 [ 3488 I ...PETITIONER Between:
AND M/s.Cargomen Logistics ln{iq Private Limited, -Bgplu:gntso .ot Mr.-Harihar trtath haVino its Retistered Office at H.No.1-10-98/33, My Projecl Kamclhenu' Owiraia DZs Coloily, Begumpet, Hyderabad, Telangana- 500 016.
1. The Additional Commissioner of Central Tax, Secunderabad GST Commissaonerate GSf ghavan, L.B. Stadium Road Basheerbagh, Hyderabad -500 004 Z. The Additional Commissioner, Audit-ll Commissionerate D.No.1-9818,120,2'1, Sanvi Yamuna PridA, Krithika'Layout, Madhapur, Hitech City, Hyderabad, Telangana -500 081 3. The Principal Commissioner of Central Tax, Secunderabad GST Commissi6nerate GST Bhavan, L.B. Stadium Road Hyderabad, Telangana - 500 004 State of Telangana, Replesented by PrincipSl Qec19!ary, Revenue Department (S1ate Tax) Secretariat, Hyderabad - 500 004 4 5 Union of lndia, Ministry of Finance, Represented by its Secretary, North Block, ...RESPONDENTS 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 pleased to issue a Writ, Order or direction particularly one in the nature of a WRIT OF CERTIORARI or any other appropriate writ (i) setting aside/quashing the Order-in-Original No. 2512O25-26-Sec-Adjn-ADC(GST), dated 20'11'2025 passed by the Respondent No. 1 under Section 74 of the CGST Act read with Section 2O of the IGST Act, for the F.Y. 2O1B-19 to 2023-24, lo the extent of New D6lhi -1 10 001
confirming a demand of Rs. 7,02,03,9721- along with interest and a penalty of Rs.7,02,03,st721-, as without jurisdiction, erroneous, arbitrary, illegat, passed in violation of principles of natural justice mandatory procedure prescribed under law and prol'isions of the CGST Act and CGST Rutes, and in abuse of process of law, (ii) set ;rside the summary of the order issued in FORM GST DRC-07 dated 24.11.2025 bearing Reference No. 2D3611250762911 for the period April 201g to March 2C'24, (iii) declaring that Petitioner is:not liable to pay anyamount, interest or pernalty in the interest of justice and equity, and in accordance with the scheme of the GST Acts.
lA NO: 1 oF,2026 Petitiorr under Section 151 CPC praying that in the circumstances stated in the affidavit filed in support of the petition, the High Court may be pleased to stay recovery of the tax, interest, penalties pursuant to (a) the impugned Order-in Original No. 125/2025-26-Sec-Adjn ADC(GST), dated 20.11.2025 to the extent of confirming a demand of Rs. 7,O2,03,972t-along with interest and a penalty of Rs.
7,02,03,9721- and (b) FORM GST DRc-07 dated 24.11.202s, passed by the 1st Respondent.
counsel for tlhe Petitioner: sRl J. NAGARAJAN (Representing sRt Karan Talwar) counsel for the Respondent Nos.l to 3: sRl DoMlNlc FERNANDES (senidr standing counsel for CB|C) counsel for the Respondent No.4: Gp FoR sTAMps AND REGlsrRATtoN counsel for the Respondent No.S: sc FoR GENTRAL GOVERNMENT The Court made the following: ORDER
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: ),,) ,:1 t IN THq HIGH COURT FOR THE STATE O[' TBLANGANA AT HYDBBABAD THE HON'BLE THE CHIEFJUST'ICE SRI APAI{ESH KUMAR STNGTI AI\D- THE IION'BLE SRr .ruSTICE EM.MOHIUDDIN Dated: 18.02.2026 Between:
I\{/s. Cargornen Logistics India Private Limited.
... Petitioner and The Additional Commissioner of Central Tax, Sec underabad GST Commissionerate, GST Bhavan, L.B.Stadium Road, Basheerbagh, Hyderabad - 500 004, and 4 others.
... Resltondents OITDER:
Learncd counsel Sri Karan Talwar, representing learrtecl cottnsel Sri J.Nagaraian, appears for the petitioner.
Sri Dorninic Fernandes, learned Senior Standing Cltlr"utscl tbr C'entral tloard of tndirect Taxes and Customs, appears lbr respotrdents No.l to 3.
I 2 2 'I'he writ petition has been filed with the followingprayer:
"For the reasons stated above, it is prayed that this Hon,ble court mav be pleased to issue a writ, order or direction particularly o're irr the ,aturc of a wt{lr oF CERTIORARI or any other appropriate rvrit (i) sefting aside/quashing the order-in-original No.25l2025-26-SecAdjn-ADC(GST) dated 20. 1 l.zo25 passed by ttre Respondent No. I u.der Secrion 74 of the CGST Act read with Section 2t) of the IGST Act, for the F.Y.2018-19 to 2023-24.to the extent of confinning a demand of Rs.7,02,03,9721- along with interest and a pt:rralty of Rs.7.02.03,9721- as without jurisdiction, erroneous, arbitrary. illeg,al. passed irr violation of principles of natural justice rrrandatorv procedure prcscribed under law and provisions of the CGS l' Act a,d CGS-I' llules. a,d in abuse of process of law, (ii) set as,ide the sununary of rlre order issued in FoRM GST DRC-O7 dated 2'l.ll-2025 bearirrg Refererrce No.ZD36l l2so762gll for the period April 201 8 to March 2024, (iii) declaring that petitioner is not liable to pay any anlount. interest or penalty; in the interest of justice and erluity and irr accordance with thc scheme of the GST Acts and pass srclr otlrer order or orders as the llon'ble High court may deem fit arrcl proper irr tlre circurnstances of the case and pass such other order tlr ordcrs as rlre Ilon'ble Higlr Court may deem fit and proper in the circurnstances of the case."
3.
1'he irrrpugned dernand has been assailed,, inter alia, on a lrumber of'grourds. both tttuching thc nrerits of the imposition of liability and also violation ol' principles ot' natural.iustice.
4.
1'rc petitioner clairns to provide services by way of transportation of goods h,"- aircral't which are exempted from Goods and Services Tax (GST) vide sl.No.l9/l9A and t98 of Notification No.l2l20l7-central Tax (t{ate) dated 28.06.2017. The petitioner contends that for the relevanr ;.-cars 20 17-2018 to 202 l-2022, it received final.audit reports on 29.03.2022 and 0-5.01.2021rvirh no objection to clairn of exemption of
3 entries. However, later in January 2025, a notice for conducting audit dated 02.01 .2025 was issued in Form GST ADT-01 Uy if'' Assistant Commissioner (Audit) proposing to conduct the audit at the place of the business of the petitioner directing the petitioner to produce books of accounrs and records for the financial years 2022-2023 to 2023-2024.
A spot memo dated 07.03.2025 was issued stating the discrepancies observed during the GST audit. An intimation in DRC-0IA was issued on 20.06.2025 alleging short payment of GST on accounl ol' "vrolg classification of services and asking the petitioner to pay an amount of Rs.9,28,08,4321- along with interest and penalty or to submit its submissions against the ascertainment of demand. The petitioner rcplicd thereto stating that there is no misclassification of services' The applicable GS't has been copectly discharged under Reverse Chargc Mechanisrrt at So/olty%o as per the applicable provisions- Thcre lbrc. thc proposed tlernand is tiable to be dropped. However' thc shotv catrsc norice rvas issued on 27.06.2025 proposing, tnter alia, the demancl of Rs.9,28.08.4321- along with interest and penalty alleging tax not paid/short paid rvith respect to the buying and selling of cargo space on principal to principal basis and services ancillary thereto uuder Sectiort 74 of rhe central Goods and Services Tax Act, 2017 (hereinalter rel'erued to as, "the Act"). The frnal audit report for the period April
Ii 4 r) 2022 trr March 2024 was issued on 16.07.2025 by the Assisiant commir;sioner, circle-[v, Hyderabad Audit-II commissionerate, providing an outline of the alleged important and material non_ compliance issues identified during the audit. The petitioner submitted its reply, tnter alia. taking the pleas that a) Section 74 ofthe Act is not invokab.le, b) thcre is no rnisclassification of services, c) the applicable GST at the rare of Syo/rg% has been correctly discharged by the petitioner under r(everse charge Mechanisrn in accordance with the applicab.le provisions of larv and d) the proposed dernand of differential tax is nc,t sustainable in lar,r, and dese.es to be dropped in full. The petitioner also attctrclecl the personal hearing corrducted on 07. 1O.ZOZS and reiterated its subrnission. It also Iiled written statements wherein it was subnritted that it acts as a service provider on a principal to principal basis. It placed rcliancc on Circular No. lg7/7/2016-Service Tax dated 12.08.2016 iss.cd urder the service tax regime and also submitted additional docurllcltts. 'l'hc llctitioner also filed written submissions on 10.10.2025 rvitlr ccrtain adcritiorrar docurnents. However, respondent No.l - proper o{'rlccr- rras passed thc irnpu-ened order-in-original dated 20.11.2025 serri.s aside the clemand o[ Rs.2,26,04,4601- while confirrninl; rhe dcrnand of Rs.7,02,03 .g7z/- as tax not paid/short paid with refbr*nce ro rhc activity of bul,ing and sclli,g of cargo space on
5 ih principal to principal basis and services ancillary T account' of misclassiffing the 'support services in Transport HSN 9967' as ,services by way of transportation of goods by an air craft or by a vessel under HSN 9967' along with applicable interest and penalty of Rs.7,02,03 ,9721- under Section 74(9) of the Act. The paitioner has assailed it as being in violation of principles of natural justice, contrary to f'acts, law, evidence and catena ofjudicial decisions' 5.
Learned counsel for the petitioner, during the course of his submissions, tried to show that the issue before this court is on the application of the correct entry under the GST regime on the basis of documents submitted by the petitioner before the proper officer which are not in dispute. It is submitted that if the final audit reports did not tind an,v discrepancy fbr the years 2017'201E to 2021'2022' the petitioner cannot be alleged to have fraudulently not paid tax at the prescribed rate to invoke the onerous conditions of Section 74 of the Acr. tt is turther subrnitted that the written submissions and additional clocunrents subrnittcd by' the petitioner have not at all been taken into consideration rvhile passing the order-in-original. Therefore, this court r,al, feel inclined to interfere in the impugned order and remand the tnatter lor proPer adjudication.
6 n 6.
Learned Senior standing counsel appearing for.respondents No.l to 3 has strongly opposed the prayer. I{e has also drawn the aftention of the court to the findings rendered by the proper officer on each of the pleas raised by the petitioner as to the question of classification or rnisclassification of the services under the proper enhy of the G|ST notification. He further subrnits that the reply submitted by the petitioner against the charges raised in the show cause notice has been elaborately discussed arrd analysed by the proper officer. In fact, the proper officer has accepted the contention o[ the petitioner so far as the demand of Rs.2,26,04,460/- is concerned and dropped it. Flowever., after detailed analysis and raking into note that the petitioner provides a bouquet of Services rvhich are not only confined to transportation on principal to principal basis. but principal to consurner basis also, the proper ollficer has rightly,' held that the pctitioncr had indulged in misclassilication of serviccs Lo evade tax fraudulently. It is subrnitted that the plea of non-consideration of the petitioncr's rcply' or violation of principles of natural .iustice is not rnade out. as the pctitioner has also been accc,rded opporttrnitr ol'hcarin-e and all his detcnces have been duly takelt into cclttsideration and <Iiscussed to come to a considered finding. Fle subrnits that the petitioner lras an efficacious remedy of f
7 ,-?\ appeal where it can take all such grounds of law and fact as may'be availabte to it to question the impugned demand.
7.
We have heard learned counsel for the parties. We have taken note of all the submissions urged and also gone through the findings of the proper officer.
8.
A perusal of the discussion and findings starting from paragraph 9 of the impugned order-in-original up to paragraph L7.3.2 shows that the petitioner has not only been granted adequate opportunity, but also alt its contentions have been duly dealt with by the proper officer while cont'irming the demand of Rs.7,02,03,972[ and at the same time dropping the dentand of Rs.2,26,04,4601-.It appears that the propcr of'tlcer has at paragraph 11.3.2 held that the demand to the extent of [ts.36,44.8121- does not survive and is liable to be set aside.
T'he proper ol'licer has. on the othcr hand, after verification of the reply and anncxures subrttittcd by'the tarpatcr, at paragraph 13.2 held that the taxpayer provides a bouquet ot'services to their clients/customers which can be scen liom the invoices issued by the taxpayer. From the business moclel dcscribed by' the taxpa)'er and the sample sale invoices as discussecl thcrcin. it rvas obscrved that the taxpayer has provided support sen,ices bt s,ay' of transporting goods to their customers through Air
8 o Fre:ight/ocean Freight. Further, the raxpayer has discharged GST @ s% in respect of 'ocean Freight lnward, by claiming the concessional rate of tax under Sr.No.9(ii) of the Notifications No.0gi20r7-IGST (Rate) dated 28.06.2017 andat Nil rate of tax fbr .ocean Freight outward, and 'Air Freight' by claiming the concessionar rate or- tax under Sr.Nos.20, 20A and 20B of Notificatio, No.09/2017 tGST(Rate) dated 28.06.2017. Atparagraph 15.3.4 of the impugncd orcrer-in-originar, the proper officer has herd that the 'arue o[ cruty crecrit scrip arnounting to Rs.10,47,41,1941- is required to be reduced fiorn rhc varue taken in the show cause notice and the demand to the exrent o[ Rs. I.gg.53.4 r 5/- i.e., at the rate of l8oz, does not survive ancl is liable to be sct aside. Further discu:;sion on the issue of crassi|ication or- sc^.ices. the craim of eligibility f6r exemption and valuario. of servicc by, the proper officer showsr that each of the grounds had been dealt with helore corning to the conclusion. Therefore, the contention oI the pr-titioner that the reply submitted by it along with additionar docurncnts anrr rvritten submissions have not been considered rcsulting irr r,.ioration of principles of natural justice is not rvorth accepta,cc. r-he irnpugred order_in_ origina'l has levied dernand on the char.e,cs relating to rnisclassi6cation of services by the petitioner and o, the plea o[ exemption by. a detailed analysis of the invoices and .trrer materiars praced by the / i:t tI ,t,
9 petitioner/taxpayer. If the petitioner is aggrieved by the determination, the proper remedy for it is to approach the appellate forum where all such grounds of law and fact as available to it can be taken. The appellate authority has the power to make further enquiries to determine the correctness and legality of the impugned dernand.
g.
Therefore, on consideration o['all these facts and circumstances, and for the reasons recorded hereinabove, this court is not inclined to entertain the writ petition on the ground o[ efflrcacious alternative remedy. The petitioner has failed to rnake out a case of interference under Article 226 of the Constitution ol'lndia on the settled principles.
Therefore, the writ petition is ilismissed. Florvever, the petitioner is at liberty to approach the appellate authoritY rvith the statutory deposit taking all such grounds of law artd lact as are available to it. Let it be made clear that none o[ the observations made hereinabove shall prejudice the case of thc parties. -thcre shall be no order as to costs.
10. Learned counscl lbr the pctitioner subrnits that the petitioner may be allowed tr,vo wocks Lirnc to prclcr thc appcal rvith statutory deposit.
The petitioner is at libertl' to dtl stl u'ithin the pcriod of two weeks.
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l0 f1 1| To, TJ TKS itdiscellaneous applications pending, if any, shall starid closed.
SD/. P.C.SULEKHA DEVI ANT REGISTRAR //TRUE COPY// ECTION OFFICER 1. OneCr3to Sri KaranTalwar, AdvocateIOPUC] 2. One C,3 to Sri Dominic Femandes (senior standing counsel for CBIC) loPUcl 3. Two CrSs to the GP for Revenue, High Court for the State of Telangana, at HyderabadlOUTI 4. One Ctl to SC for Central Government[OPUC] 5. Two Clf Copies
HIGH COURT DATED:1 8 10212026 ORDER r\ L.
WP.No.4806 of 2026 '"j.\'i- \'..'
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DISMISSING THE WRIT PETITION WITHOUT COSTS 1 t{E S t4 1 5 APB 2026 ).'
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