M/S. Chilukuri Enterprises LLP vs. The Union Of INDIA

WP/7019/2025HC TelanganaGSTCNR HBHC01013835202519 March 2025Bench: SUJOY PAUL,RENUKA YARA7 pages

For Respondent: SRI GADi PRAVEEN KUMAR' DEPUY, SOLICITOR GENERAL, OF INDIA

AI SummaryDismissed

Facts

The petitioner, Chilukuri Enterprises LLP, assails a show cause notice dated February 27, 2025, which also suspended its GST registration. This is the second time the petitioner has approached the High Court regarding its GST registration. Previously, a show cause notice dated October 30, 2024, led to an order cancelling registration on January 21, 2025. However, the respondents dropped those proceedings on January 28, 2025, and subsequently issued the current show cause notice. The petitioner argues that the notice pre-empts a conclusion, making the opportunity to reply an empty formality. The respondents contend the notice contains only allegations and not conclusions, and that interference at this stage is limited.

Held

The Court held that a conjoint reading of paragraphs 11 and 16 of the show cause notice reveals that the averments are in the nature of allegations and not conclusions. Therefore, the judgment in SBQ Steels Limited v. Commissioner of Customs, Central Excise and Service Tax, Guntur, relied upon by the petitioner, was found to be of no assistance. The Court reiterated the principle that interference by a writ court at the stage of a show cause notice is limited. Citing the Supreme Court's decision in Special Director v. Mohd. Ghulam Ghouse, the Court noted that whether a show cause notice is founded on legal premises is a jurisdictional issue that can be adjudicated by the issuing authority itself. In the absence of any grounds for interference, the Court found no reason to intervene. The petitioner was directed to file its reply within ten days, and the authorities were instructed to consider the reply and pass a decision in accordance with the law. Admission of the writ petition was declined, and the petition was dismissed.

Key Issues

1. Whether the show cause notice dated February 27, 2025, which also suspends the petitioner's GST registration, is vitiated by pre-judgment, rendering the opportunity to reply a mere formality, thereby warranting interference by the High Court under Article 226 of the Constitution of India, particularly in light of the principle laid down in SBQ Steels Limited v. Commissioner of Customs, Central Excise and Service Tax, Guntur? Petitioner's contention: The show cause notice itself indicates that a conclusion has already been drawn regarding the cancellation of registration, making the process of filing a reply an idle ceremony. Therefore, the notice should be interfered with. Respondents' contention: The language used in the show cause notice clearly indicates that it is tentative in nature and the averments are merely allegations. No definitive conclusions have been drawn. Paragraph 16 of the notice, which states that the registration 'appears to be liable for cancellation', supports this argument. Furthermore, interference by a writ court at the stage of a show cause notice is permissible only on limited grounds, and the petitioner has not raised any jurisdictional issues.

Sections Cited

Section 16(2)(c), Rule 21(e), CGST Rules, 2017

AI-generated summary — verify with the full judgment below

Cause title — parties, addresses and appearances

HIGH COURT FOR THE STATE OF TELANGANA AT HYDERABAD (Special Original Jurisdiction) WEDNESDAY, THE NINETEENTH DAY OF MARCH TWO THOUSAND AND TWENTY FIVE PRESENT THE HONOURABLE THE ACTING CHIEF JUSTIbE SUJOY PAUL AND THE HONOURABLE SMT JUSTICE RENUKA YARA WRIT PETITI ON NO: 7019 0F 202s 434461 Managing [Vledchal Between: Yl.;-^C-hi$!yl Enterprises L!f, Rep_ by Mahender Reddy Chitukuri, f,1T1u,l,_Ngq?l?m Kee-sara, ^Kushi Garden, ptor No.101,' Hyderabad, MarKaJgtn, I etangana - 500093. .....PETITIONER AND 1. The. Union of lndia, Repres_qnted by itssecretary, Department of Revenue, Ministry of Finance, Ndrth Block, ru6w Oetfri f t dOO. 2. The Commissioner of Customs and Central Tax, Medchal GST Commissionerate, Ill Floor, Medchal GST Bhavin, i l_+_ecb/e, Lakdikapul, Hyderabad - 500 004. 3. The Superintendent of Central Tax, Keesara GST Range, Medchal GST Division, Plot no.16 and21, Aditya Towers, sri sai enct"ive, oro eoriJnparry, Secunderabad. 4. The Assistant commissioner ({E), office of the principar commissioner of Central.Tax, Ranga Reddy GST Cbmmissionerate, ViF ii[;; tufiil;;, '' Hyderabad. 5. TheDgputy Director, DGGI, HZU, H.No.1-6312t2-12, plot No.212 and213, Block B, Kavuri Hills, Madhapur, Hyderabad. .....RESPONDENTS Petition Under Article 226 of the constitution of lndia praying that in the circumstances stated in the affidavit filed therewith, the High court may be pleased to issue a direction or orders, more particularly in the nature of a writ of Mandamus or any other appropriate writ, decraring the impugned notice vide REG-17 bearing Reference No. 24360225146953E dated 27-02-2025 cancelling theregistrationofpetitionerasillegalandviolationofArticlelg(tXg)and3004of the Petitioner I.ANO:1 OF 2025 PetitionUndersection,l5lcPCprayingthatinthecircumstancesstatedin the affidavit filed in support of the petition, the High court may be pleased to direct the Respondent No. 3 to suspend the operation of the impugned notice vide REG-17bearingReferenceNo.24360225146953Edated27-02-2()25andallow operation of registration of the Petitioner, pending disposal of this writ petition' Counsel for the Petitigner : SRI M.UMASHAANKAR, LEARNED COUNSEL APPEARAING FOR SRI PUPPALA BHARATH NANDAN Counsel for the Respondent No.1 : SRI GADi PRAVEEN KUMAR' DEPUY SOLICITOR GENERAL, OF INDIA Counsel forthe Respondent Nos.2 to 5 : SRI DOMINIC FERNANDES' LEARNED SENIOR COUNSEL FOR CBIC

The Court made the following ORDER

THE HON'BLE THE ACTING CHIEF JUSTICE SUJOY PAUL AND THE HON'BLE SMT. JUSTICE RENUKA YARA WRIT PETITION No.7Ol9 of 2o25 ORDER: (Per the Hon'bte the Acting Chief Justice Sujoy paul) Sri M.Umashankar, learned counsel appearing for Sri P.Bharath Nandal, learned counsel for the petitioner and Sri Dominic Fernandes, learned Senior Standing Counsel for CBIC, for respondent Nos.2 to 5. 2. Heard on admission.

This writ petition assails the show cause 27.O2.2025, whereby the petitioner,s registration arrd it is directed to file reply by 10.03.2025. notice dated is suspended

Criticizing the impugned show cause notice, learned counsel for the petitioner submits that this is the second visit of the petitioner to this Court. Earlier, respondents issued a show cause notice dated 3O.I0.2024 which resulted with issuarrce of the order of cancellation of registration of the petitioner dated 2l.OI.2O2S. However, when the petitioner assailed the same in the previous

2 round i.e., W.P.No.2210 of 2025, the respondents dec:.ded to drop the proceedings by order dated 2g.O1.2025 and therezrfter, issued the impugned slrou, cause notice dated 27.O2.2O25. 5. The singul.ar ald principal contention of learned counsel for the petitioner is based upon the judgment of the High Court of Judicature for Andhra Pradesh at Hyderabad 1n SBQ Steels Limited v. Commissioner of Customs, Central excise and Service Tax, Gunturt. It is submitted that when the show cause notice shows .irat a conclusion has been dranvn, i1. is an idle ceremony to ask the petitioner to l-rle reply ald the show cause notice itself can be interfered with.

Learned lltanding Counsel, on the other hand, submits that the language enrployed in the show cause notice shorvs that it is only tentative in nature and whatever is averred is in the shape of only 'allegatiorrs'. No 'conclusions' have been drawn. The attention of this Court is drawn to paragraph No.16 :f the show cause notice u,hich reads thus:- "i6. As M/s Chilukuri has contravened the Section 16(2)(c) as mentiooed above, the registration of the M/s C:hilukuri ' zor+ 1:oo1 e.L.t. res u..r.y

3 Enterprises LLP., GSTIN: 36AASFC7OBSEIZ9, appeats to be liable for cancellation under Rule 2l(ef of the CGST Rules, 2Ol7 . Accordingly, registralion is suspended with effective from 27.O2.2O25." 7 .

We have heard the learned counsel for the parties.

A conjoint reading of paragraph Nos.11 and 16 of the show cause notice shows that the averments are in the nature of 'allegations' and not tonclusions,. Thus, the judgment in SBe Steels Limited (supra) is of no assistance to the petitioner. 9 . This is trite that interference by the writ court at the stage of show cause notice can be made on limited grounds. The petitioner has not assailed the show cause notice on the ground of lack of competence. The Apex Court in Special Director v. Mohd. Ghulam Ghouse2 opined that the scope of interference on show cause notice is limited. It was held as under: , I "5... Whether the show-cause notice was founded on any iegal premises, is a juri ictional issue which can be even be urged by the recipient of the notice and such issues also can be adjudicated by the authority issuing the very notice initially, before the aggrieved could approach the court..." ' lzooa; : scc ++o

4 \

10.

In view of the aforesaid judgment, we find no reason to interfere in the instant case. If the petitioner files its rtrply within ten days from to,lay, the authorities sha-ll consider the reply and take a decision ir accordance with law.

11.

The admission is declined and the writ petition is dismissed with the a-foresalrl observations. No order as to costs Miscellalecus petitions pending, if any, shall star'l closed. N. SRIHARI ASSISTANT REGISTRAR //// ECTION OFFICER To 1. One CC to SRI PUPPALA BHARATH NANDAI' Advocate [OPUC] 2. one cc to sRl GADI Pil;;i'Niriirt'rnC' DEPUTY sollclrcR GENERAL OF INDIA Advor;ate [OPUCI

ONE CC tO SRI OOIVIUId;LNNANDES' LEARNED SENIOR COUNSEL FOR CBIC, Advocate (OPUC)

Two CD CoPies SA LS lL

HIGH COURT DATED:1910312025 ORDER WP.No.7019 of 2025 DISMISSING THE W.P WITHOUT COSTS. ( A- a tj! 11 Arn 2[25 r{E ::; T,/r rF {a iJ > 6j rt * D5SP/' f C /o

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.