M/S Kale Khan Through Its Proprietor Shri Kale Khan vs. Union Of INDIA

Held

The Court held that considering the rival submissions and the fact that the petitioner had already sent a reply to the show-cause notices, purportedly under Rule 142(4) of the CGST Act/Rules, it was appropriate for Respondents No. 2 and 4 (SGST authorities) to consider the reply filed by the petitioner as per law. The Court directed that the matter should be decided in view of the law referred to by the petitioner's counsel within one month from the date of the order. The Court did not explicitly decide the interpretation of Section 6(2)(b) but effectively directed the authorities to proceed with the decision-making process, considering the petitioner's reply and the principle of earlier notice.

Facts

The petitioner, M/s Kale Khan, filed a writ petition challenging show-cause notices dated June 27, 2025, and September 26, 2025, issued by Respondent No. 4. The petitioner argued that a CGST show-cause notice was issued on June 11, 2025, concerning irregularities in GST assessment on royalty for assessment years 2018-19 and 2019-20. Subsequently, an SGST notice was issued for the same transaction. The petitioner contended that as per Section 6(2)(b) of the Central Goods and Services Tax Act, 2017, the authority that issued the earlier notice should decide the matter. The petitioner had already submitted a reply to the show-cause notices.

Key Issues

1. Whether, in light of Section 6(2)(b) of the Central Goods and Services Tax Act, 2017, the authority that issued the earlier show-cause notice (CGST) should exclusively decide the matter, precluding the authority that issued a subsequent notice (SGST) for the same transaction? Petitioner's Argument: The petitioner argued that Section 6(2)(b) of the CGST Act mandates that if an earlier notice is issued by either CGST or SGST, the matter should be decided based on that initial notice, and the subsequent authority should not proceed. They relied on this provision to assert that the CGST authority, having issued the first notice, has jurisdiction. Revenue/State's Argument: The counsel for the respondents opposed the prayer. However, the counsel for Respondent No. 3 (CGST) fairly submitted that in similar factual situations, the appropriate authority would be the one that issued the notice earlier.