Judgment
[ 3488 ] IN THE HIGH COURT FOR THE STATE OF TELANGANA AT HYDERABAD (Special Original Jurisdiction) TUESDAY,THE SIXTH DAY OF JANUARY 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: 32866 OF 2025 Between:
AND M/s. Aarush Enterprises, 3-6-293, Opposite Apollo Hospital, Hyderguda, Hyderabad, Telaniana- 500029. Represented !Y its Proprie_tof,_ 9!ql:,lt Kistappa Naik, S/o--Kishtappa Naik, Aged about 40 years, Rlo 10-3-7412311.
Teachbrs Colony, East Mairbdpally, Secunderabad, Telangana- 500 026 ...PETITIONER 1. The Assistant Commissioner of Central Tax, Himayatnagar Division, Hyderabad Commissionerate, H. No. 3-6-436/1 to 438/1 , 1'' Floor, Naspur House, Hyderabad -500 029 2. The Sup6rintendent of Central Tax, Himayathnagar-.!l- Range, Himay,atnagar Division, Hyderabad Commissionerate, H. No. 3-6-43611 to 438/1, 1" Floor, Naspur House, Hyderabad -500 029 3. The Deputy Corirmissioner ST, Enforcement Wing, O/o Commercial Tax Department. Nampally, Hyderabad, Telangana 4. Union of lndia, trlinistry of Finance, Repreiented by its Secretary, North Block, New Delhi-110 001 5. State of Telangana, Through Principal Secretary to Government' Revenue Department (Commercial Tax), Hyderabad, Telangana ...RESPONDENTS Petition under Article 226 of lhe 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 more particularly one in the nature of a Writ of Mandamus declaring that impugned Show Cause Notice No. 1012025' GST-ADC-AC/DC dated 19-09-2025, along with Form DRC-O1 bearing Reference No. 2D3609250295162 issued under Section 73 and Reference No.
2D3609250295419 issued under Section 74 by the Respondent No 1, as violative of Section 6(2Xb) of the CGST/TGST Act,2017, and consequently void, arbitrary, illegal, without jurisdiction, and violative of the principles of natural iustice, apart
from being contrary to Articles 14, 19(1)(g), and 265 of the Constitution of India, and to set aside the same lA NO: 1 OF 2025 Petition 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 operation of impugned Show Cause Notice No. '10/2025-GST-ADC-AC/DC dated 19-09-2025, along with Form DRC 01 bearing reference no 2D3609250295162 u/s 73 and 2D3609250295419 u/s 74 issued by the Respondent No. 1 Counsel for the Petitioner: SRI P. VENKATA PRASAD REP M/S P. V. PRASAD ASSOCIATES Counsel for the Respondent Nos. 1&2: SRI D. RAGHAVENDAR RAO, SENIOR COUNSEL FOR CBIC Counsel for the Respondent No.3: GP FOR COMMERCIAL TAX Counsel for the Respondent No.4: SRI B. MUKHERJEE REP SRI N. BHUJANGA RAO, DY. SOLICITOR GENERAL OF INDIA The Court made the following: ORDER
THE IN TIIE HIGH COURT FOR TIIE STATE OF TELANGANA AT HYDERABAD I,E THE rT]STICE SRI PARESH K SINGH AND rB DATED: 06.01.2026 Between:
M/s. Aarush Enterprises Petitioner AND The Assistant Commissioner of Central Tax, H i mayatnagar D iv ision, H yderabad Commiss ionerate, H.No.3-6-43611to 438/1, 1" Floor, Naspur House, Hyderabad - 500 029 &.4 others .. Respondent ORDER:
Heard N/k. P.Venkata Prasad, Iearned counsel representing IWs. P.V.Prasad Associates appearing for the petitioner, Mr' D'Raghavendar Rao, learned Senior Standing Counsel for Central Board of lndirect Taxes and customs (CBIC), appearing for respondent Nos.1 and 2 and Mr. B.Mukherjee, learnecl counsel representing Mr. N.Bhujanga Rao, learned Deputy Solicitor General of India appearing for respondent No'4' 2.
For easy reference to gather the substratum of the dispute, the order dated 31.t0.202.5 and the order dated 20.1t.2025 are extracted hereunder:
tlI iI
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2 31.10.2025:
"[-ear.cd crunsel Sri p.Venkata prasad, represe.ting N,us.p.v.prasad Ass()ciates. appears tor thc petitioner.
Sri D.Ragh,r'e.dar Rao. rearned -scnior Standing Counsel for Central Board of Indirect Taxes and customs, appears for rcspondents No.r and 2 throueh vidco cont'erencing.
[,earned counsel Sri Angothu Nehru appears tbr respondent No.4.
The shor"'cause n.tice dated 19.09.2025 along rvith Forrn GST DRC_01 issued undcr Sectir>n 73 and als. under .section 74 of the central Goods and Services'fax Act. 20 l7lTelansana Goods and,services Tax Act.20l7, for the tax period 2o2l-2022 is under challense in this writ petition on the ground that the State Tax auth.rities have alread,r, ad.iudicated the demand in respect of the sanre transaction L''y the order-in-original clated 21.04.2025, against which the allpeal is pending.
l-earned counsel for the petitioner subrnits that the impugned show cause ncrtice is in violation of Section 6(2)(b) of the Central Goods and Services Tax Act,2017.
lrarned Senior Standing counsel fbr central Board of Indirect Taxes and crrstoms appearinu for the respondents pray,s for two weeks time to obtain instructions.
List this case 0n 20.11.2025 In the meantirne. there shall be interim stay of the impugned show cause notice."
20.11.2025:
''Sri P. venkata prasacr, Ieamed cou.sel, representing M/s. p.v. prasad Associates, appears tbr the petitiouer.
Sri D. Raghavendar Rao, rearned Senior Standing Counsel for centrar Board of Indirect Taxes and customs, appears for respondent Nos. r and 2.
Theshowcausenorice dated r9.09.2025 against the petitioner for the financial year 2021-22 is on three counts, which read as under:
"3. Excess availmcnr of Input Tax Credit (lTC) of Rs.2,2g,450/_ (IGST: Rs.30,890.-, CGST: Rs.98,780/_ & SGST: Rs.98,780/_) in
{ )'t 3 GSTR-3B in comparison with ITC available in GSTR-2A, (GSTR 38 vs 2A)."
"4. The taxpayer has clairned ITC of Rs.96,08,924l- (CGS t:
Rs.48,04,462l- & SGST: Rs.48,04,462l-) in respect of supplies rc'ceived from taxpayer rvhose registration has been cancelled suo- Inoto retrospecti vely."
"5. lrregular availment of Btocked/ineligible credit of Rs.19,57]l (IGST: Rs.2,285/-, CGST: 8,644/- & SGST: Rs.8,644/-) during the period 2021-22 for contravention of provisions of Section l7(5) of the CGST.\ct.2017."
The show cause notice issued by the State tax authorities is under Section 122 ol tlre Telangarra State Goods arrd Services Tax Act,20l7 (for short, "the TGST Act") in respect of the financial year 2021-22 alleging that the petitioner has issued fake invoices without any underlying supply of the goods, which is liable for penalty under Section l2l(l) to an amount equivalent ro rhe Input Tax Credit (lTC) passed on to an amount under Central Goods and Services Tax Act, 2017 (for short, "the CGST AcI")/TGST Act. The proceedings by the State tax authorities has ended in imposition of penalty by order dated 21.04.2025. The proceedings by the Central Goods and Services Tax (CGST) have not been concluded. The petitioner has preferred an appeal against the order-in-original passed by the State tax authorities and approached this court alleging that the impugned show cause notice issued by the Central tax authorities is violative of Section l6(2Xb) of the CGST Act.
Leamed counsel for the petitioner has drawn the attention of this Court to show cause notice that the question of fake invoices without underlying supply are also the subject matter of the shou, cause notice. The proceedings by the State tax authority tbr issuance of fake invoices without underlying supply and unavailing ITC are also those which could be under scrutiny in the proceedings by the CGST authorities, whlch is not proper on the part of the CGST authorities in view of Section l6(2Xb) of the CGST Act.
Leamed counsel f<lr the respondent submits that the subject matter of both the proceedings do not overlap. Separate proceedings for penalty under Section 122 and inegular and illegal availment of ITC under Section'1.4(l) of the CGST Act can be initiated by the State and Central tax authorities.
On consideration of the rival submissions of the parties and in the aforesaid facts and circumstances, we are of the view that since the penaity ;
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4 proceedings have concluded and the petitioner has preferred an appeal and whereas the proceedings before the CGS'I'authorities are yet to be concluded, the show cause notice dated 19.09.2025 issued by respondent No. I be kept in abeyance till the appeal preterred by the petitioner is decided. The appellate authority of the State tax deparlrrtertt shall ct'rttclude the appeal proceedings in accordance with larv within a period clf tbur rveeks frorrr the date of receipt of a copy of this order. Petitioner shall cooperate in the proceedin-as.
lrt this order be communicated through respondent No.5 to the concemed appellate authority i.e., Appellate Joint Cornmissioner (ST), Secunderabad Division. Hyderabad.
[.et the matter be listed on 30.12.2025.'' 3.
Today when the matter has been taken up, learned counsel for the petitioner informs that the Appellate Authority of the State Tax has not concluded the appeal proceedings against the penalty imposed under Section 121(1) of the Central Goods and Services Tax Act,Z}l7lTelangana Goods and Services Tax Act, 2017 (hereinafter referred to as 'the CGST/TGST Act'). The officer has changed and therefore, proceedings may not have been disposed by now 4.
On the part of the Central Tax Authorities, learned Senior Standing Counsel for CBIC submits that for the tirne being, the interest of the petitioner has already been protected by keeping the show cause notice issued by the Central Tax Authorities in abeyance. The Appellate Authority of the State Tax has also been directed to conclude the appeal proceedings initiated under Section 122 of the CGST/TGST Act. He submits that with the aforesaid protection, the matter may be disposed of at this stage with liberty to the Central )
5 Tax Authorities to pass an order on the show cause notice dated 19.09.2025 after consideration of petitioner's reply, but only after the Appellate Authority of the State Tax concludes the appeal proceedings in respect of the show cause notice under Section 122 of the CGST/TGST Act.
5.
Leamed counsel for the petitioner has made strenuous efforts to convince us that since a question of overlap of proceedings, be it under Section 73 or 74 of the CGST/TGS'I and Section 122 of the CGST/TGST Act, is involved, the matter may be decided by this Courl itself.
6.
However, at this stage, we refrain from expressin g any final opinion in the matter. Taking into account the submission of the parties, this Court had kept the show cause notice dated 19.09.2025 issued by Central Tax Authorities in abeyance while directing the Appellate Authority of the State Tax to conclude the appeal proceedings, in accordance with law, within a period of four weeks from the date of receipt of copy of the order, which, however, has not yet been concluded.
7.
We are of the view that the Central Tax Authorities should proceed with the show cause notice dated 19.09.2025 but only after conclusion of the appeal proceedings pending before the Appellate Authority of the State Tax.
Meanwhile, Petitioner may file reply after disposal of the appeal and take all available points in law and fact including the question of overlap and reference
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6 to CBIC circular dated 06.07.2022 in its reply before the Central Tax Authorities. Needless to say, the Central Tax Authorities would take ilto consideration the grounds urged on behalf of the petitioner and also the fi.dings of the Appellate Authority of the State Tax in the appeal proceedings while taking a decision ir-r the ntatter. Needless to say, if the petitioner is aggrieved by the order of the Central Tax Authorities or the Appellate Authority of the State Tax, it would be open for it to assail it in an appropriate proceeding on all grounds of law and fact available to it. The Appellate Authority of the State'fax is directed to conclude the proceedings, if not yet concluded within a further peliod of three weeks from today.
8 The instant Writ Petition is, accordingly, disposed of. However, there shall be no order as to costs.
9.
Let the order be comrnunicated to the Appellate Authority of the State Tax by the petitioner.
Miscellaneous applications pending, if any, shall stand closed.
SD/.AHMED ABDULLAH KHAN ASSISTANT REGISTRAR 6 /TRUE COPY// SECTION OFFICER To 1. The Assistant Commissioner of Central Tax. Himavatnaoar Division.
Hyderabad.commissiglergte, H. No 3-6-436/1 to 43gt1", 1.t Floor, irlaspur House, Hyderabad -500 029 2- Ifg 9rpqtintendent of CentralTax, Himeyathnagar-lt Range, Himayatnagar pivlsion, Hyderabad commissione_rate, u. No. gla-qsan td qsan, ,fr rtoior, _ Naspur House, Hyderabad -500 029 3. The Deputy commissioner sr, Enforcement wing, o/o commercial rax . p."p4rent. Nampally, Hyderabad, Telangana 4. Il:9Slr"tary, Uriion-of lndia, Miniitry of Finance, North Block, New Delhi- 110 001
5. The Principal Secretary to Government, Revenue Department (Commercial Tax), Hyderabad, Telangana 6. twd CCs to GP FOR C"OMMERCIAL TAX, High Court for the State of Telangana, at Hyderabad [OUT] T One cC to TVVS P V PRASAD ASSOCIATES, Advocate [oPucl B. One CC to SRl. D. RAGHAVENAR RAO, (senior standing counsel for CBIC) loPUCl 9. bne CC to SRI N. BHUJANGA RAO, DY. SOLICITOR GENERAL OF INDIA IoPUCI 10. Two CD Copies BM BS nlT I
I HIGH COURT DATED:06/0 112026 ORDER WP.No.32866 of 2025 DISPOSING OF THE WRIT PETITION WITHOUT COSTS -ii ^1{ I_ 03 rt8 2m fa S () * * c\* tv