Halaplay Technologies PVT LTD And Anr vs. Union Of INDIA And Ors.
Original PDF →Facts
Halaplay Technologies Private Limited & Anr. (the appellants) filed a writ petition challenging Rule 31A(3) of the Central Goods and Services Tax Rules, 2017 and West Bengal Goods and Services Tax Rules, 2017, along with Circular No. 27/01/2018-GST, as ultra vires. They also challenged a show-cause notice dated July 24, 2024, issued under Section 74 of the CGST Act, as illegal and without jurisdiction. The learned Single Bench admitted the writ petition and passed an interim order allowing proceedings to continue but restraining the final order from being uploaded or communicated without court leave. The appellants appealed this interim order, citing a subsequent Supreme Court order in a similar case that granted a stay on show-cause notices. The appellants argued that the initial show-cause notice was issued by an authority without jurisdiction, as their place of business was not in Tamil Nadu. The revenue stated a corrigendum was issued, making the notice answerable to an authority in Bengaluru, and that the appellants had participated in the adjudication.
Held
The High Court held that it would not be justified in entertaining the intra-Court appeal to test the correctness of the impugned interim order based on a subsequent Supreme Court order. However, acknowledging that the Supreme Court had entertained a writ petition and granted a stay on show-cause notices, the Court granted liberty to the appellants to file a fresh application in the writ petition before the learned Single Bench to seek modification of the interim order to align with the Supreme Court's order. The Court explicitly stated that it had not adjudicated the merits of the matter or the correctness of the legal submissions. The issue regarding the jurisdiction of the adjudicating authority was expressly left undecided and to be determined when the writ petition is taken up for hearing. The appeal was disposed of with the liberty granted to the appellants.
Key Issues
1. Whether Rule 31A(3) of the Central Goods and Services Tax Rules, 2017 and West Bengal Goods and Services Tax Rules, 2017, along with Circular No. 27/01/2018-GST, are ultra vires Article 14 of the Constitution of India and Sections 2(52), 7, and 15 of the CGST Act, 2017 and WBGST Act, 2017? 2. Whether the show-cause notice dated July 24, 2024, issued under Section 74 of the CGST Act, is illegal, bad in law, without jurisdiction, arbitrary, and unreasonable? Contentions of the Appellants/Petitioners: The appellants argued that the interim order passed by the learned Single Bench was incorrect, especially in light of a subsequent order by the Hon'ble Supreme Court in Golden Peace Infrastructure Private Limited & Anr. Vs. The Assistant State Tax Officer, which granted a stay on similar show-cause notices. They also contended that the initial show-cause notice was issued by an authority lacking jurisdiction, as their registered place of business was not within Tamil Nadu. Contentions of the Revenue/State: The revenue submitted that a corrigendum was issued on December 10, 2024, amending the show-cause notice to be answerable to an authority in Bengaluru. They also stated that the appellants had participated in the adjudication process.
Sections Cited
Section 74, Rule 31A(3), Section 2(52), Section 7, Section 15
AI-generated summary — verify with the full judgment below
Cause title — parties, addresses and appearances
JUDGMENT (Judgment of the Court was delivered by T.S. SIVAGNANAM, C.J.)
This intra-Court appeal by the appellants/writ petitioners is directed against the interim order dated 8th January, 2025. The said writ petition was filed by the appellants for varied prayers. The first of such prayer was to declare Rule 31A(3) of the Central Goods and Services Tax Rules, 2017 and West Bengal Goods and Services Tax Rules, 2017 along with Circular
2 2 No.27/01/2018-GST dated January 4, 2018 to be ultra vires Article 14 of the Constitution of India and Section 2 (52), Section 7 and Section 15 of the C.G.S.T. Act, 2017 and W.B.G.S.T. Act, 2017 (for brevity, “the act”).
Apart from the said prayer for issuance of a writ of declaration, the appellants have also challenged the show-cause notice dated July 24, 2024 issued under Section 74 of the C.G.S.T. Act to be illegal and bad in law, without juri iction, arbitrary and unreasonable.
The learned Single Bench while admitting the writ petition took note of the order passed by a Co-ordinate Single Bench dated 30th November, 2023 in fact that the show-cause notice has already been issued, the proceedings were permitted to go on and the appellants/writ petitioners were directed to file their response to the show-cause notice within a time period and the adjudicating authority was directed to give an opportunity of hearing to the appellants/writ petitioners and however, final order shall not be uploaded and communicated to the appellants/writ petitioners without the leave of the Court and the respondents were also restrained from enforcing such order without the leave of the Court.
The appellants before us challenging the said limited interim order by relying upon an order passed by the Hon’ble Supreme Court in the case of Ward, Goa & Anr. in Writ Petition (s) (Civil) No (s).50/2025 dated 22nd January, 2025. We find in the said order that the Hon’ble Supreme Court has taken note of an order dated 10th January, 2025 passed in Special Leave to Appeal (C) Nos.19366-19369/2023 and other connected matters and granted stay of the impugned show-cause notices before it.
Thus, the attempt of the appellants before us is to challenge the impugned interim order based on an order passed by the Hon’ble Supreme Court, which was admittedly much after the impugned interim order was passed by the learned Single Bench.
Therefore, we will not be justified in entertaining this appeal to test the correctness of the impugned order based upon an order passed by the Hon’ble Supreme Court, which is admittedly much after the interim order dated 8th January, 2025. However, since the Hon’ble Supreme Court has entertained the writ petition and granted an order of stay of the show-cause notices till the final disposal of the matter, we grant liberty to the appellants/writ petitioners to file a fresh application in the writ petition and seek for appropriate modification of the interim order dated 8th January, 2025 to be in tune with the order passed by the Hon’ble Supreme Court.
The learned advocate appearing for the appellants/writ petitioners submitted that the show-cause notice, which was issued was made answerable to the Additional/Joint Commissioner of CGST & CX, Chennai (South), Tamil Nadu and the said authority will not have juri iction to adjudicate the show-cause notice since, the registered place of business of the appellants/writ petitioners is not within the juri iction of the said authority in the State of Tamil Nadu as the appellants/writ petitioners are 4 4 initially carrying on business in the State of Karnataka from 2017 onwards till November 20, 2022 after which the appellants are stated to have shifted their place of business to the State of West Bengal.
The learned Senior Standing Counsel appearing for the respondents submitted that after the show-cause notice was issued, a Corrigendum dated 10th December, 2024 was issued whereby the appropriate portions of the show-cause notice dated 24th July, 2024 was amended and the show- cause notice was made answerable to the Additional/Joint Commissioner of CGST & CX, Bengaluru East Central Tax Commissionerate, Bengaluru and the appellants/writ petitioners had also participated in the adjudication process and the adjudicating authority has passed orders. This issue need not be adjudicated at this juncture and the same is kept open and left to be decided when the writ petition is taken up for hearing.
Accordingly, we dispose of the appeal along with the connected application (I.A. No. CAN 1 of 2025) giving liberty to the appellants/writ petitioners to file a separate application before the learned Single Bench and seek for appropriate orders in the light of the order passed by the Hon’ble Supreme Court dated 22nd January, 2025 and if such application is filed, the Hon’ble Single Bench is at liberty to decide the matter on merits and in accordance with law.
We make it clear that we have not adjudicated the merits of the matter nor the correctness of the legal submissions made by the learned advocate for the appellants/writ petitioners based upon the order passed by the Hon’ble Supreme Court and it will be well-open to the Hon’ble Single Bench to take a decision on merits and in accordance with law.
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No costs.
Urgent photostat certified copy of this order, if applied for, be furnished to the parties expeditiously upon compliance of all legal formalities.
(T.S. SIVAGNANAM) CHIEF JUSTICE I agree. (CHAITALI CHATTERJEE (DAS) J.) Pallab/KS AR(Ct.)
Reproduced from the public record of the Calcutta High Court. Verify against the court's own copy before relying on it. Income tax judgments are on bharattax.net.