M/S Shimla Industries PVT LTD Through Its Director Devendra Dwivedi vs. The Union Of INDIA

Held

The Court allowed Writ Petition Nos. 12375/2025, 14241/2025, 14592/2025, and 15808/2025, quashing the impugned order dated 05.02.2025. The Court held that the adjudicating authority was wholly unjustified in refusing to extend the reliefs granted in the M/s Elora Tobacco case to the present petitioners. The Court rejected the revenue's contention that the Elora Tobacco order was 'in personam', emphasizing that judicial discipline and propriety mandate that quasi-judicial authorities follow High Court pronouncements. Once the High Court had directed the opportunity for cross-examination and the return of documents for one noticee, the authority ought to have followed the same for other noticees facing similar circumstances. The Court found the reasoning of the adjudicating authority to be arbitrary and legally untenable. The matters were remanded back to the adjudicating authority to pass a fresh order after returning all unrelied documents to the petitioners, allowing them 30 days to file a fresh reply, and affording them due opportunity of hearing, including the right to cross-examine witnesses. The Court explicitly stated it had not expressed any opinion on the merits of the case. For WP No. 17609/2025, the Court dismissed the petition, finding it had no merit as the petitioner did not appear before the authority or request cross-examination or document return. However, liberty was granted to challenge the impugned order through available remedies.

Facts

Multiple petitioners, including M/s Dabang Dunia Publications Pvt Ltd, M/s Rani Press Pvt. Ltd., M/s Vinayaka Filtraade Pvt. Ltd., M/s Shimla Industries Pvt Ltd, and M/s Ink Fruit, filed writ petitions challenging orders-in-original passed by the Joint Commissioner, Central GST and Excise, Indore. The primary challenge in WP No. 12375/2025, representing the common facts, concerns an order dated 05.02.2025 that confirmed a GST demand of ₹151,64,38,832/- (CGST and SGST) and Compensation Cess of ₹1794,58,34,178/-. The petitioner alleged violation of natural justice, specifically denial of adequate opportunity to defend its case, access to non-relied upon documents, and the right to cross-examine witnesses. This followed a show cause notice dated 08.06.2022 alleging tax evasion and facilitation of money laundering through inflated circulation figures and fictitious invoices, linked to M/s Elora Tobacco.

Key Issues

1. Whether the impugned order-in-original dated 05.02.2025, passed by the Joint Commissioner, Central GST and Excise, Indore, is illegal, invalid, and improper for violating the principles of natural justice by denying the petitioner adequate opportunity to defend its case, access to non-relied upon documents, and the right to cross-examine witnesses, thereby contravening Article 226 of the Constitution of India? 2. Whether the adjudicating authority was justified in holding that the order passed by this Court in the case of M/s Elora Tobacco Company Limited, which granted the right to cross-examine and return of unrelied documents, was applicable only to that specific petitioner ('in personam') and not to other noticees ('in rem') facing similar allegations and show cause notices? Petitioner's Arguments: The petitioners contended that the impugned order was passed in gross violation of natural justice and in disregard of this Court's prior directions in the M/s Elora Tobacco case. They argued that they were denied a reasonable opportunity to defend themselves, access to crucial documents not relied upon in the show cause notice, and the right to cross-examine witnesses whose statements formed the basis of allegations. They relied on the order in M/s Elora Tobacco Company Limited v. Union of India and others, which was upheld by the Supreme Court, directing the return of non-relied documents and permitting cross-examination. Revenue's Arguments: The respondents argued that the order passed in the case of Elora Tobacco was 'in personam' and not 'in rem', meaning it was specific to that petitioner and not binding on other noticees. They also contended that for WP No. 17609/2025, the petitioner did not appear before the authority, nor did they make any application for the return of documents or for cross-examination.