M/S Toyotetsu INDIA Auto Parts PVT. Limited vs. Union Of INDIA
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Cause title — parties, addresses and appearances
ORAL ORDER
In this petition, petitioner seeks the following reliefs: “a) Issue a writ of Certiorari or a Writ in the nature of Certiorari or any other appropriate Writ or order or direction under Article 226 of the Constitution of India quashing the impugned show cause notice bearing по. GEXCOM/AE/INV/GST/5667/2022 11833 dated 29.09.2023 NC: 2025:KHC:14433 issued by the Respondent No. 4 in FORM GST DRC-01 enclosed at Annexures - A; b) Issue a writ of Certiorari or a Writ in the nature of Certiorari or any other appropriate Writ or order or direction under Article 226 of the Constitution of India quashing the impugned show cause notices bearing no. JCCT (VIG)ACCT-4/GST/ADJN-01/2023-24/1189 dated 07.08.2023 & JCCT (VIG)ACCT-4/GST/ADJN-01/2023-24/1190 dated 07.08.2023 issued by the Respondent No. 6 enclosed at Annexures-B and Annexure-B1; c) Hold that the Petitioner has rightly availed input tax credit of Rs.5,65,26,537/- in respect of the IGST paid on manpower supply services received by the Petitioner during the period 2017-2022 (till December 2022) as proposed in the impugned show cause notice bearing no. GEXCOM/AE/INV/GST/5667/2022 11833 dated 29.09.2023 issued by the Respondent No. 4 in FORM GST DRC-01 enclosed at Annexures - A; d) hold that the interest under Section 50 of the CGST Act, 2017, including Rs.83,97,182/ and Rs.80,13,497/- for the period 2017-18 and 2018-19 respectively, on the belated payment of IGST of Rs.5,65,26,537/- is not payable as proposed to be recovered in the impugned show cause notice bearing no. GEXCOM/AE/INV/GST/5667/2022 11833 dated 29.09.2023 issued by the Respondent No. 4 in FORM GST DRC-01 enclosed at Annexures - A and the impugned show cause notice JCCT (VIG)ACCT-4/GST/ADJN-01/2023- 24/1189 dated 07.08.2023 & JCCT (VIG)ACCT- NC: 2025:KHC:14433 4/GST/ADJN-01/2023-24/1190 dated 07.08.2023 issued by the Respondent No. 6 enclosed at Annexures-B and Annexure-B1; e) Hold that the interest under Section 50 of the CGST Act, 2017 on the input tax credit availed is not payable as proposed to be recovered in the impugned show cause notice bearing no. GEXCOM/AE/INV/GST/5667/2022 11833 dated 29.09.2023 issued by the Respondent No. 4 in FORM GST DRC-01 enclosed at Annexure A and the impugned JCCT (VIG)ACCT-4/GST/ADJN-01/2023-24/1189 dated 07.08.2023 & JCCT (VIG)ACCT-4/GST/ADJN-01/2023- 24/1190 dated 07.08.2023 issued by the Respondent No. & enclosed at Annexures-B and Annexure-B1; f) Hold that the penalty of Rs.8,48,200/- and Rs.9.37,251/- for the period 2017-18 and 2018-19 respectively is not imposable as proposed in the impugned JCCT (VIG)ACCT-4/GST/ADJN-01/2023-24/1189 dated 07.08.2023 & JCCT (VIG)ACCT-4/GST/ADJN-01/2023- 24/1190 dated 07.08.2023 Issued by the Respondent No. 6 enclosed at Annexure-B and Annexure-B1; g) Hold that the penalty in terms of Section 74(1) and Section 122(1)(vii) and (x) is not imposable as proposed in the impugned show cause notice bearing no. GEXCOM/AE/INV/GST/5667/2022 11833 dated 29.09.2023 issued by the Respondent No. 4 enclosed at Annexures – A; h) Pass such further order(s) and other reliefs as the nature and circumstances of the case may require.” NC: 2025:KHC:14433
Heard learned counsel for the petitioner and learned counsel for the respondents and perused the material on record.
In addition to reiterating the various contentions urged in the petition and referring to the material on record, learned counsel for the petitioner invited my attention to the impugned Show Cause Notices at Annexures – B and B1 both dated 07.08.2023 issued by respondent No.6 – State revenue in order to point out that even though proceedings have been initiated by respondent Nos.1, 3 and 4 in December 2022, respondent No.6 – State authorities have initiated proceedings vide impugned Show Cause Notices at Annexures – B and B1, which are barred under Section 6(2)(b) of the KGST Act and consequently, the same deserves to be quashed in the light of the judgment of this Court in the M/s. Toyota Kirloskar Motor Pvt. Ltd. Vs. Union of India and others – W.P.No.22952/2023 dated 21.08.2024. 4. It is also submitted that denial of the Input Tax Credit in favour of the petitioner for the period from July 2017 – December 2022 is also illegal and arbitrary in the light of the Circular No.211/5/2024-GST dated 26.06.2024, which has been relied upon by this Court in the aforesaid judgment. It is therefore submitted NC: 2025:KHC:14433 that the impugned Show Cause Notices at Annexures – B and B1 deserve to be quashed to the extent of denial of Input Tax Credit in favour of the petitioner and the matter remitted back to respondent No.4 for reconsideration afresh in accordance with law.
It is also submitted that the valuation for the purpose of payment of taxes plus interest is covered by Circular No.210/4/2024-GST dated 26.06.2024 and the decision of the Delhi High Court in the case of Thales India Private Limited Vs. Additional Commissioner of CGST, Audit – II, Delhi & Another – 2025 (2) TMI 245 – Delhi High Court. It is therefore submitted that the petition may be allowed and disposed of accordingly.
It is further submitted that though respondent No.4 purportedly invoked Section 74(1) of the CGST / KGST Act for the purpose of initiating proceedings vide Annexure – A dated 29.09.2023, the same may be treated / construed as proceedings under Section 73 of the CGST / KGST Act so as to enable the petitioner to avail the benefit of Amnesty scheme under Section 128A of the CGST Act. NC: 2025:KHC:14433
Per contra, learned counsel for the respondents submits that there is no merit in the petition and that the same is liable to be dismissed.
A perusal of the material on record will indicate that it is an undisputed fact that in December 2022, respondent No.4 had initiated proceedings / intimation under Section 70 of the CGST Act by issuing summons on 07.12.2022, which is followed by the Show Cause Notices dated 29.09.2023. Meanwhile, despite having initiated proceedings on 07.12.2022, it is respondent No.6 – State authorities who has issued the impugned Show Cause Notices at Annexures – B and B1. In this context, it is pertinent to note that the said issue is answered by this Court in M/s. Toyota Kirloskar – W.P.No.22952/2023 dated 21.08.2024, wherein it is held as under:
“9. A perusal of the material on record and the submissions made by both sides will clearly indicate that prior to the State GST Authorities issuing the impugned Show Cause Notices at Annexures – A, A1, A2 is concerned, the Central GST Authorities had already initiated proceedings as against the petitioner and consequently, in the light of Section 6(2)(b) of the KGST Act, 2017 which contemplates a complete bar / embargo on NC: 2025:KHC:14433 the State GST Authorities to initiate proceedings in a situation where the Central GST Authorities had already initiated proceedings as against the petitioner in respect of the same subject matter. I am of the considered view that the impugned Show Cause Notices at Annexures – A, A1 and A2 are clearly illegal, arbitrary and without juri iction or authority of law and contrary to the aforesaid statutory provisions and the same deserve to be quashed.” As held in the aforesaid judgment, in view of Section 6(2)(b) of the CGST Act, Annexures – B and B1 deserve to be quashed.
Insofar as challenge to the impugned Notice at Annexure – A coupled with the contention that the petitioner would be entitled to avail Input Tax Credit under Section 16(4) of the CGST / KGST Act is concerned, in the light of the aforesaid judgment of this Court, petitioner is to be relegated back to respondent No.4 for consideration of its claim in accordance with law in the light of the said decision and the Circular No.211/5/2024- GST dated 26.06.2024. 10. Insofar as the valuation regarding payment of tax and interests are concerned, in view of Circular No.210/4/2024-GST dated 26.06.2024 even this issue would necessarily have to be decided by respondent No.4 in accordance with law and the NC: 2025:KHC:14433 decision of Delhi High Court in Thales India Private Limited Vs. Additional Commissioner of CGST, Audit – II, Delhi & Another – 2025 (2) TMI 245 – Delhi High Court.
In the result, I pass the following: ORDER
(i) The petition is hereby allowed.
(ii) The impugned Show Cause Notices at Annexures – B and B1 both dated 07.08.2023 issued by respondent No.6 are hereby quashed. (iii) Petitioner is relegated to the stage of filing reply to the Show Cause Notice at Annexure – A dated 29.09.2023 before respondent No.4. (iv) Liberty is reserved in favour of the petitioner to file its reply, pleadings, documents, etc., before respondent No.4, who shall consider the same and pass appropriate orders in accordance with law bearing in mind the judgment of this Court in M/s. Toyota Kirloskar Motor Pvt. Ltd. Vs. Union of India and others – W.P.No.22952/2023 dated 21.08.2024; the decision of Delhi High Court in Thales India NC: 2025:KHC:14433 Private Limited Vs. Additional Commissioner of CGST, Audit – II, Delhi & Another – 2025 (2) TMI 245 – Delhi High Court; Circular No.211/5/2024-GST dated 26.06.2024 and Circular No.210/4/2024-GST dated 26.06.2024. (v) All rival contentions on all aspects of the matter are kept open and no opinion is expressed on the same. (vi) Liberty is reserved in favour of the petitioner to seek the benefit of Amnesty scheme before respondent No.4 by converting the proceedings from Section 74 to Section 73 for the purpose of availing Amnesty scheme under Section 128A of the CGST Act. If such a request for availing Amnesty Scheme is made by the petitioner, the respondent No.4 shall consider the same and proceed further in accordance with law. (S.R.KRISHNA KUMAR) JUDGE
SV List No.: 2 Sl No.: 0
Reproduced from the public record of the Karnataka High Court. Verify against the court's own copy before relying on it. Income tax judgments are on bharattax.net.