Astrum Developments PVT LTD vs. The Union Of INDIA And Ors

Held

The Court held that the grounds raised by the Petitioners did not render the impugned show cause notice wholly without jurisdiction. While jurisdictional facts might need examination, the case did not present a scenario of patent lack of jurisdiction. The Court noted that the Respondents could consider the details of the demerger and the applicability of the GST Notification, 2018, when disposing of the show cause notice, provided the Petitioners filed a detailed response with full particulars. The Court reiterated the principle that Writ Petitions are ordinarily not entertained against show cause notices, as parties have an opportunity to respond, citing Whirlpool Corporation and Oberoi Constructions Ltd. The Court found that the Petitioners had not made out an exceptional case to avoid responding to the notice or to have it struck down at the threshold, as the investigation would involve factual elements and interpretation of documents. Therefore, the Petitioners were relegated to respond to the show cause notice. The Court dismissed the Petition but clarified that this order would not preclude the Petitioners from raising their contentions in response to the show cause notice, and no observations in the order would influence the adjudication of the notice, which must be done on its own merits.

Facts

The Petitioners, Astrum Developments Pvt. Ltd. and another, challenged a show cause notice dated 27 June 2025, issued under Section 74 of the CGST Act, 2017. The notice was issued to Neo Pharma Private Limited concerning a Joint Development Agreement entered into on 25 February 2012. The Petitioners argued that Neo Pharma Private Limited had demerged its Pune Constructions Business by an NCLT order dated 07 March 2022, with assets and liabilities vesting in Astrum Developments Private Limited. They contended that this fact was intimated to the Respondents, making the notice to the transferor company without jurisdiction. Furthermore, they argued that applying the GST Notification of 2018 retrospectively to the 2012 agreement was also without jurisdiction. The Respondents argued that the Petition was premature, as the grounds raised did not go to the root of jurisdiction and factual verification was required.

Key Issues

1. Whether the show cause notice issued under Section 74 of the CGST Act, 2017, to Neo Pharma Private Limited is without jurisdiction, given that its Pune Constructions Business, including assets and liabilities, was demerged and vested in Astrum Developments Private Limited by an NCLT order dated 07 March 2022, and this fact was intimated to the Respondents? (Question of mixed law and fact, concerning jurisdiction and effect of demerger order). 2. Whether the show cause notice is without jurisdiction due to the retrospective application of the GST Notification of 2018 to a Joint Development Agreement entered into on 25 February 2012? (Question of law, concerning statutory interpretation and retrospective application of notifications). Petitioner's Contentions: The show cause notice is without jurisdiction because it was issued to Neo Pharma Private Limited, the transferor company, after its business was demerged and vested in Astrum Developments Private Limited, and this was intimated to the Respondents. Additionally, the retrospective application of the GST Notification of 2018 to a 2012 agreement renders the notice without jurisdiction. Respondents' Contentions: The Petition is premature, and a Writ Petition to challenge a show cause notice should not ordinarily be entertained. The grounds raised do not go to the root of jurisdiction, and factual aspects need verification. Therefore, the Petition should be dismissed.