M/S Vinyasa Automation Systems PVT LTD vs. Commercial Tax Officer

Facts

The petitioner, M/s Vinyasa Automation Systems Pvt Ltd, is challenging an Adjudication Order dated 10.12.2025, passed by the Commercial Tax Officer (Audit)-6.4 under Section 74(9) of the CGST/KGST Act, 2017, for the tax period April 2018 to March 2019. The order was based on the allegation that the petitioner claimed Input Tax Credit (ITC) from M/s JKS Steel Supplier, which was found to be a non-existent entity and allegedly registered solely for fraudulent ITC passing. The petitioner did not respond to the Show Cause Notice, attributing this failure to its accountant. The petitioner sought to quash the impugned orders.

Held

The Court allowed the petition in part. It quashed the impugned Adjudication Order and Summary thereof, restoring the proceedings initiated by the Show Cause Notice dated 16.06.2025. The Court reasoned that a cause was shown for interference due to the circumstances and the nature of the allegations, which required ascertainment through verification. The petitioner was granted liberty to file its reply and supporting documents by 15.10.2026. The Court directed the petitioner to appear before the first respondent on 15.10.2026 without further notice. The Court was persuaded to opine that a cause was shown for interference and restoration of the proceedings with an opportunity to the petitioner to file documents, considering the accountant's failure and the possibility of verification under Rule 25 of the CGST Rules.

Key Issues

1. Whether the Adjudication Order passed under Section 74(9) of the CGST/KGST Act, 2017, is liable to be quashed on the grounds of procedural irregularity and lack of opportunity to the petitioner to present its case? The petitioner argued that its failure to respond to the Show Cause Notice was due to its accountant's negligence and that it should be granted an opportunity to produce documents to demonstrate the genuineness of the ITC claim, citing Circular 183/15/2022. The petitioner also stated that the ITC in dispute was approximately Rs. 62,372/- The respondents, represented by the High Court Government Pleader, accepted notice and were heard. No specific arguments were recorded for the respondents in the judgment.