M/S Souhardha Infra Tech PVT LTD vs. The Joint Commissioner Of Commercial Taxes (Appeals-06)

Held

The Court held that while a question of jurisdiction, if it goes to the root of the cause and is raised as a pure question of law, can be raised even after the first appeal, interference with the initiation of proceedings on jurisdictional grounds could be deferred in this case. The Court observed that the petitioner had filed a detailed response on 25.05.2024 to the intimation and had produced documents for reconciliation. The Court noted that the Adjudicating Authority observed a lack of sufficient documents, and the Appellate Authority dismissed the appeal on the grounds of non-response to the intimation and show cause notice, failing to consider the petitioner's reconciliation. The Court found reason to interfere with the Appellate Authority's order, quashing it and restoring the appeal for reconsideration. The Appellate Authority was directed to consider the question of jurisdiction along with other aspects. The petitioner was granted three weeks to present the order to the Appellate Authority for a fresh hearing.

Facts

The petitioner, M/s Souhardha Infra Tech Pvt Ltd, filed a writ petition challenging an Order-in-Appeal dated 15.05.2025 and an Order-in-Original dated 08.08.2024. The challenge was primarily on the grounds of jurisdiction. The petitioner contended that the Assistant Commissioner of Commercial Taxes (Audit) initiated proceedings by issuing a Show Cause Notice dated 29.05.2024 without proper audit, and even before the conclusion of an inspection by the Vigilance Wing. The petitioner claimed to have filed a detailed reply to the intimation and reconciliation of supplies. The respondents argued that the jurisdiction for the show cause notice was conferred by an Inspection Report and that the petitioner had not responded to the Show Cause Notice, despite filing a response to the initial intimation.

Key Issues

1. Whether this Court should interfere with the initiation of proceedings on the ground of jurisdiction, or with the Appellate Authority’s order dated 15.05.2025? Petitioner's arguments: The petitioner argued that the Assistant Commissioner of Commercial Taxes (Audit) initiated proceedings without a proper audit and before the conclusion of the Vigilance Wing's inspection. They also contended that they were not informed of the inspection outcome and that the proceedings were commenced prematurely. The petitioner asserted that they had filed a detailed reply to the intimation on 25.05.2024, providing a reconciliation of supplies. Revenue's arguments: The revenue contended that the question of jurisdiction might not be available to the petitioner as the intimation (Form GST DRC-01A) was based on an Inspection Report, which conferred jurisdiction for the show cause notice. They further argued that while the petitioner responded to the intimation, they failed to file a response to the subsequent Show Cause Notice (Form GST DRC-01), and the reconciliation documents were filed only with an application for rectification after the Appellate Authority's order.