Yash Innovative Solution LLP Through Its Designated Partener vs. Joint Commissioner Goods And Services Tax And State Tax And Anr
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The petitioner, Yash Innovative Solution LLP, is a Limited Liability Partnership providing project management consultancy services to government institutions. Its case was selected for scrutiny, leading to a notice regarding a difference between GSTR 7 deductions and GSTR 3B turnover. The petitioner claimed no mismatch and that its services were exempted. A subsequent show cause notice dated 18.06.2025 alleged unpaid tax of Rs. 57,55,627/- on a TDS turnover of Rs. 3,19,75,708/-. The petitioner replied, explaining a misconception regarding services to the Municipal Corporation, Aurangabad, and detailing GST paid on taxable services. An adjudication order dated 26.12.2025 imposed a total liability of Rs. 2,06,46,142/- including interest and penalty. The petitioner challenged both the show cause notice and the adjudication order.
Held
The Court held that the writ petition was maintainable, referencing the exceptions carved out by the Supreme Court in Whirlpool Corporation, including violation of principles of natural justice and orders being wholly without jurisdiction. The Court found that the adjudication order was unsustainable as it imposed a liability of Rs. 2,06,46,142/-, which included tax, interest, and penalty, exceeding the amount of Rs. 57,55,627.44/- demanded in the show cause notice. This contravened Section 75(7) of the MGST Act, which stipulates that no demand shall be confirmed on grounds other than those specified in the notice, and the amount shall not exceed the amount specified in the notice. Furthermore, the Court noted that the petitioner's ground regarding exemption from tax on services provided to government entities, as per Notification No. 12/2017, was not considered by the respondent in the adjudication order. Consequently, the impugned show cause notice and adjudication order were quashed and set aside. The matter was remanded back to the respondent for reconsideration on merits after providing the petitioner an opportunity of hearing. The respondents were permitted to issue an additional demand notice.
Key Issues
1. Whether the writ petition is maintainable despite the availability of an alternate remedy under Section 107 of the CGST Act, considering the alleged violation of principles of natural justice and the order being without jurisdiction? 2. Whether the impugned adjudication order, which imposed a tax liability of Rs. 2,06,46,142/- (including interest and penalty), is sustainable when the show cause notice demanded only Rs. 57,55,627.44/-, thereby violating Section 75(7) of the MGST Act? 3. Whether the petitioner's claim of exemption from tax on services provided to government entities, as per Notification No. 12/2017 dated 28.06.2017, was duly considered by the respondent before passing the adjudication order? Petitioner's arguments: The show cause notice and adjudication order were issued in violation of principles of natural justice and were without jurisdiction. Reliance was placed on decisions of the Allahabad, Madras, and Karnataka High Courts. The petitioner also cited Godrej Sara Lee Ltd. Vs. The Excise and Taxation Officer-cum-Assessing Authority to support the maintainability of the writ petition. Respondents' arguments: The petitioner has an alternate and efficacious remedy of appeal under Section 107 of the CGST Act, and thus the petition should not be entertained. The respondents argued that an opportunity of hearing was provided, negating the claim of violation of natural justice.
Sections Cited
Section 61, Section 73, Section 75, Section 107, Section 11(1)
AI-generated summary — verify with the full judgment below
Cause title — parties, addresses and appearances
cause notice and the adjudication order.
Heard learned advocate for the petitioner. He assailed the show cause notice and the impugned adjudication order stating that both are issued in utter violation of principles of natural justice and both are without juri iction. In support of his submission, reliance is placed on the decisions of Division Bench judgment of Allahabad High Court and Single Bench decision of Madras and Karnataka High Court. ksk/
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26-Directions 8W, Disposed of 6. Learned AGP for the respondents has strenuously opposed the petition arguing that the petitioner has alternate and efficacious remedy of filing appeal under Section 107 of the CGST Act and therefore, according to him the petition should not be entertained. He further submits that opportunity of hearing was given to the petitioner and therefore, there is no merit in the submission of the petitioner that principles of natural justice are not followed.
In reply to the ground of maintainability of the writ petition, learned advocate for the petitioner has relied upon Godrej Sara Lee Ltd. Vs. The Excise and Taxation Officer-cum-Assessing Authority and Ors.; AIR 2023 SC 781. 8. Heard learned advocate for the petitioner and learned AGP at length. Perused the record and the citations relied upon.
In Godrej Sara Lee Ltd. (Supra) the Apex Court on the point of maintainability of the writ petition, wherein alternate efficacious remedy is available, has held that; "6. as under: ksk/
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26-Directions 8W, Disposed of (i) where the writ petition seeks enforcement of any of the fundamental rights (ii) where there is violation of principles of natural justice; (iii) where the order or the proceedings are wholly without juri iction; or (iv) where the vires of an Act is challenged."
In the decisions relied upon by the petitioner, it is held that, "Section 75 of the said Act deals with general provisions relating to determination of tax and sub-Section (7) specifically stipulates that the amount of tax, interest and penalty demanded in the order shall not be in excess of the amount specified in the notice and no demand shall be confirmed on the grounds other than the grounds specified in the notice.” We are in respectful agreement with the aforesaid proposition.
Applying this ratio to the facts of the present case, it is clear that in the impugned notice a demand of Rs. 57,55,627.44/- is made to the petitioner. In the impugned adjudication order, a liability of payment of Rs. 2,06,46,142/- which includes tax plus interest plus penalty is imposed on the petitioner.
Since the same is contrary to the provision sub-Section (7) of Section 75, the impugned notice and the adjudication order cannot be sustained in the facts of the present case.
Another ground raised by the petitioner in reply to the show cause notices that petitioner is rendering services to the State ksk/
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26-Directions 8W, Disposed of Government or Government Undertaking or Corporation, etc. which are exempted and therefore as per Notification No. 12/2017 dated 28.06.2017, it is exempted from paying the taxes under Section 11(1) of the CGST Act, is not considered by the respondent while passing the impugned adjudication order. The impugned order is unsustainable on this ground also.
In the result, Writ Petition succeeds. The impugned show cause notice dated 18.06.2025 as well as the impugned order dated 26.12.2025 are hereby quashed and set aside.
The matter is remanded back to respondent No. 2 for consideration on merits in accordance with law after giving opportunity of hearing to the petitioner. The said exercise shall be completed within eight (8) weeks from the date of receipt of copy of this order.
Respondents are permitted to issue additional demand notice to the petitioner.
Rule is made absolute in the above terms.
The Writ Petition is disposed of. [VAISHALI PATIL-JADHAV, J.] [NITIN B. SURYAWANSHI, J.] ksk/
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Reproduced from the public record of the Bombay High Court. Verify against the court's own copy before relying on it. Income tax judgments are on bharattax.net.