M/S. Sri Durga Bhavani Enterprises vs. Assistant Commissioner (State Tax)

WP/9924/2025HC TelanganaGSTCNR HBHC01019872202503 April 2025Bench: SUJOY PAUL,RENUKA YARA6 pages

For Petitioner: SRI Y. SlRl REDDYFor Respondent: SRI SWAROOP OORILLA, SPL GP for State Tax

AI SummaryAllowed

Facts

M/s. Sri Durga Bhavani Enterprises (the petitioner) filed a writ petition before the Telangana High Court challenging a show cause notice dated 30.11.2024 and a consequent assessment order dated 28.02.2025, both issued by the Assistant Commissioner (State Tax) (the first respondent). The tax period in question is 2020-21. The petitioner contended that these actions were without jurisdiction, barred by limitation, and contrary to the CGST Act, 2017. The respondents included the Commissioner of Commercial Taxes, the State of Telangana, and the Union of India. The petitioner sought to set aside the show cause notice and the assessment order.

Held

The Court held that the argument of the petitioner regarding the limitation period for issuing the show cause notice has substance. A combined reading of Section 73(2) and 73(10) of the CGST Act, 2017, indicates that the department is permitted to issue a show cause notice up to three months prior to the passing of the assessment order. In this case, the assessment order was passed on 28.02.2025, meaning the show cause notice should have been issued by 28.11.2024. However, the notice was issued on 30.11.2024, which is beyond the statutory period. The Court found this interpretation consistent with the view taken by the Andhra Pradesh High Court in M/s. The Cotton Corporation of India (supra). Consequently, the Court found that the impugned assessment order could not sustain judicial scrutiny. The impugned assessment order dated 28.02.2025 was set aside. The writ petition was allowed to the extent indicated. No costs were awarded. Interlocutory applications, if any, were also closed.

Key Issues

1. Whether the show cause notice dated 30.11.2024, issued for the tax period 2020-21, is barred by limitation under Section 73 of the Central Goods and Services Tax Act, 2017, and the Telangana Goods and Services Tax Act, 2017? Petitioner's arguments: The petitioner argued that a conjoint reading of Section 73(2) and 73(10) of the CGST Act, 2017, permits the issuance of a show cause notice up to three months prior to the passing of the assessment order. Since the assessment order was passed on 28.02.2025, the show cause notice should have been issued by 28.11.2024. However, it was issued on 30.11.2024, making it beyond the statutory period of limitation. The petitioner relied on the judgment of the Andhra Pradesh High Court in M/s. The Cotton Corporation of India v. Assistant Commissioner (ST) (Audit) (FAC), State of Andhra Pradesh, Union of India. Respondents' arguments: The Special Government Pleader for State Tax formally opposed the petition but did not dispute the facts regarding the tax period, the issuance date of the show cause notice, or the date of the assessment order.

Sections Cited

Section 73(2), Section 73(10)

AI-generated summary — verify with the full judgment below

Cause title — parties, addresses and appearances

t s446 I IN THE HIGH COURT FOR THE STATE OF TELANGANA AT HYDERABAD (SPecial Original Jurisdiction) THURSDAY ,THE THIRD DAY OF APRIL TWO THOUSAND AND TWENTY FIVE PRESENT THE HONOURABLE THE ACTING CHIEF JUSTICE SUJOY PAUL THE HONOURABLE SMT JUSTICE RENUKA YARA WRIT PETITI ON NO:99240F 2025 Between: AND 1 M/s.sriDurgaBhavaniEnterprises,(RepbyitsAuthorizedSiqnatorv)'H-No' 8-8-4014. Dilkush Nasar, N;;; iV. 'rrrtbo6t scnoot' Hvderibad' Medchal- Malkajgiri Telangana -500 037 ...PETITIONER Assistant Commissioner (State Tax), Basheerbagh-2 Circle' Abids Division' Hyderabad 2.CommissionerofCommercialTaxes,C.T.Complex,opp.GandhiBhavan, NampallY, HYderabad- 50000'1 3. State of Telangana, (Rep. by Chief Secretary-and Special Chief Secretary to " il;;';;""t (FACii,'stdiilai Department, Secretariat' Hvderabad' 4. Union of lndia, (Rep. by its Secretary (Finance))' North Block' New Delhi-1 1 0 001 ...RESPONDENTS Petition under Article 226 of the Constitution of lndia praying that in the circumstancesstatedintheaffidavitfiledtherewith'theHighCourtmaybe ;i";;;; ioto issue a writ of mandamus or any other appropriate writ-or order..or ii,""t; by setting aside the show cause notice dated 30'11'2024 and the consequent assessment orier dated 28 'O2 '2025 issued by the 1 -Respondent under Section 73 of the Central Goods and Services Tax Act' 2017 and the i;L;g;;" Goods and Services Tax Act, 2017 lor the tax period 2o2o-21 on """or"rt of being without jurisdiction, as being barred by limitation and contrary to the scheme ofthe CGST Acl,2017' lA NO: 1 OF 2025 Petition under Section 151 CPC praying that in the circumstances stated in the affidavit filed irr support of the petition, the High Court may be pleased to grant interim stay of all further proceedings pursuant to the inrpugned Show Cause Notice dated 30.11.2024 and the consequent assessment order dated 28.02.2025 issued by the 1st Respondent for the tax period 20'20-21, pending disposal of the writ Petition as othenrrrise the Petitioner will be pu': to severe loss and hard ship. " Counsel for the Petitioner: SRI Y. SlRl REDDY Counsel for the Respondent No.1 to 3: SRI SWAROOP OORILLA, SPL GP for State Tax Counsel for the Respondent No.4: SRI B. MUKHERJEE REPRESENTING FOR SRI GADI PRAVEEN KUMAR, DY. SOLICITOR GENERAL OF INDIA

The Court made the following: ORDER l I

THE HON'BLE THE ACTING CHIEF JUSTICE SUJOY PAUL AND THE HON'BLE SMT. JUSTICE RENUKAYARA WRIT PE"flTION No.9924 of 2o25 ORDER (Per the Hon'ble the Acting Chief Justice Sujog Paul): Sri Y. Siri Reddy, learned cor.rnsel for the petitioner; Sri Swaroop Oorilla, learned Special Government Pleader for State Tax, for respondent Nos. 1 to 3 and Sri B" Mukherjee, learned counsel representing Sri Gadi Praveen Kumar, learned Deputy Solicitor General of India, for respondent No'4'

With the consent, hnallY heard

L,earned counsel for the petitioner submits that the impugned show cause notice was issued beyond the permissible statutory limitation. The tax period is 2O2O-2O21' The impugned show cause notice was issued on 3O'11'2024 and the impugned assessment order was passed on 28'02'2025' A conjoint reading of Section 73(2\ and (10) of the Central Goods and Services Tax Act, 2Ol7 (for short, 'the Act'), made it permissibie for the respondents to issue the show cause notice upto 28.1 1.2024 whereas, in the present case, it was issued on 30.11.2024 and therefore, it is beyond the statutory period of limitation. Reliance is placed on the judgment of Andhra i

2 Pradesh High Court in M/s. The Cotton Corporation of India v. Assistant Commissioner (ST) (Auditf (FACl, State of Andhra Prad.esh, Union of Indial. 4. l,earned Special Government Pleader- for State Tax formally opprtsed the petition. However, he did not ,:lispute the facts regarding tax period, issuance of impugned s,how cause notice arrd dzLte of passing of impugned assessment order.

We find substance in the argument of learned counsel for the petiti,rner that a combined reading of Sectiorr 73(21 and (10) of the Act permits the Department to i ssue s how cause notice upto three months prior to the passing of the ilssessment order. The assessment ordei was passed on 28.02',.2025 and therefore, thr: show cause notice could have been il;sued upto 28.77.2024. Whereas, in the instalt case, it was issued on 30.11.2024. Similar view was taken by the Andhr.,a pradesh High Court in M/s. The Cotton Corporation of India (supra). In view of the statutory provisions and interpretation by the Andhra Pradesh High Court, u,e find substantial fc,rce in the argument of learned counsel for the petitioner t.hat the. impugned assessment order calnot sustain judicial scrutiny. \ t zOZs 121 rVt:ez-andhra pradesh High court \

Resultantly the impugned assessrnent order dated 28.02.2025 is set aside and the Writ Petition is allowed to the extent indicated above. No costs. Interlocutory applications, if any pending, shall also stand closed . P.CH.NAGABHUS AMBA DEPUTY G TRAR //// SECTION FFICER To, 1 2 3 Assistant Commissioner (State Tax), Basheerbagh-2 Circle, Abids Division, Hyderabad Cirmmissioner of Commercial Taxes, C.T. Complex, Opp. Gandhi Bhavan, Nampally, Hyderabad- 50000 1 tfre bnitit Secretary and Special Chief Secretary to Government (FAC), State Tax Department, Siate of Telangana, Secretariat, Hyderabad. The Sebretary (Finance), Union bf lndia, North Block, New Delhi-1 10 001 One CC to SRI Y. SlRl REDDY, Advocate [OPUC] One CC to SRI SWAROOP OORILLA, SPL GP for State Tax [OPUC] One CC to SRI GADI PRAVEEN KUMAR, (Deputy Solicitor General of lndia), High Court for the State of Telangana at Hyderabad. [OPUC] Two CD Copies 4 5 6 7 o w. i l \

HIGH COURT DATED:031A412025 ORDER WP.No.9924 of 2025 ALLOWING THE WRIT PETITION WITHOUT COSTS € STAT k lr, 0 4 |,Pt 2m vz c.\ ,,/,' ',,iiij.i * + r'S i i I I I

Reproduced from the public record of the Telangana High Court. Verify against the court's own copy before relying on it. Income tax judgments are on bharattax.net.