Sushil Kumar Agarwala vs. Assistant Commissioner CGST And Cx, Shyambazar Div. Kol. North Commissionerate And Ors.

Held

The Court acknowledged that the writ petition raises a jurisdictional issue and therefore should be heard. Considering the prima facie case and the fact that an adjudication order had already been passed, the Court directed the petitioner to secure a portion of the demand. The petitioner was ordered to deposit Rs. 50,000/- with the Registrar General of the High Court by October 8, 2024. Concurrently, an unconditional stay of the adjudication order dated March 27, 2024, was granted until October 8, 2024. If the deposit is made, it will be invested in an interest-bearing fixed deposit account, and the interim order will continue until the disposal of the writ petition or further orders. The Court also set timelines for the filing of affidavits.

Facts

The petitioner, Shri Sushil Kumar Agarwala, filed a writ petition challenging an order in original dated March 27, 2024, passed under Section 73(2) of the Finance Act, 1994, read with Section 174(2) of the CGST Act, 2017. The petitioner argued that the enforcement of the CGST Act, 2017, from July 1, 2017, meant no new proceedings could be initiated under the Finance Act, 1994. A recovery notice dated August 22, 2024, was issued, prompting the urgency. The CGST authorities contended that Section 174(2)(e) of the CGST Act allows for the continuation of investigations, inquiries, and adjudication under the previous law. The High Court, acknowledging a jurisdictional issue, directed the petitioner to deposit a portion of the demand pending further orders.

Key Issues

1. Whether proceedings initiated under Section 73(2) of the Finance Act, 1994, after the enforcement of the CGST Act, 2017, are valid, considering the provisions of Section 174(2)(a) and (e) of the CGST Act, 2017? The petitioner argued that with the enactment of the CGST Act, 2017, from July 1, 2017, no new proceedings could be initiated under the Finance Act, 1994, rendering the order dated March 27, 2024, non est and unenforceable. They relied on Sections 173 and 174(2)(a) and (e) of the said Act. The revenue (CGST authorities) contended that Section 174(2)(e) of the CGST Act, 2017, preserves the right to continue investigations, inquiries, verification, adjudication, and recovery of arrears, effectively allowing them to enforce orders under the Finance Act, 1994, as if it had not been omitted. They relied on Section 174(2)(e) of the said Act.