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

Held

The Court allowed the petition in part. It quashed the impugned Adjudication Order and Summary of Order dated February 23, 2026. The Court reasoned that it had previously accepted the petitioner's bonafides for non-participation in adjudication proceedings in similar circumstances and opined that the petitioner should be given another opportunity to produce documents, as permissible under Circular 183/15/2022. The Court restored the proceedings initiated by the Show Cause Notice dated August 1, 2025. The petitioner is granted liberty to file a reply and supporting documents by November 30, 2026. The petitioner is directed to appear before the first respondent on November 30, 2026, without further notice. The ratio is that where a petitioner demonstrates bonafides for non-participation in adjudication and can potentially prove the genuineness of transactions, a High Court, in its writ jurisdiction, can quash the adjudication order and grant an opportunity to present evidence, especially when supported by relevant circulars and prior judicial precedent.

Facts

The petitioner, M/s. Vinyasa Automation Systems Pvt Ltd., challenged an Adjudication Order and Summary of Order dated February 23, 2026, passed by the Commercial Tax Officer (Audit)-6.4. These orders pertain to the tax period April 2019 to March 2020 and were issued under Section 74(9) of the KGST/CGST Act, 2017, read with Sections 4 and 20 of the IGST Act, 2017. The dispute involves a tax liability of Rs. 3,28,316/-. The petitioner had also filed a similar writ petition for the financial year 2018-19, which was decided on September 9, 2026, allowing the petitioner an opportunity to demonstrate the genuineness of transactions. The current petition relies on the same grounds and circumstances accepted in the previous order.

Key Issues

1. Whether the petitioner should be granted an opportunity to produce documents to justify the genuineness of transactions with M/s. J.K.S Steel Supplier, given that the supplier is allegedly not in existence, and consequently, whether the tax liability, interest, and penalty imposed under Section 74(9) of the KGST/CGST Act, 2017, are sustainable? (Mixed question of law and fact, turning on Section 74(9) of the KGST/CGST Act, 2017). Petitioner's contention: The petitioner argues that they can produce documents to prove the genuineness of the transactions. If the transactions are proven genuine, there should be no liability for CGST/KGST, interest, or penalty. They rely on the precedent set by this Court in a similar case decided on September 9, 2026, which accepted their bonafides for non-participation in adjudication proceedings and allowed them an opportunity to present evidence. They also refer to Circular 183/15/2022. Respondents' contention: The respondents, represented by the High Court Government Pleader, did not present specific arguments against the petitioner's plea for an opportunity to produce documents, given the prior order of this Court.