2025 (5) TMI 387 - HC - GST

Challenge to SCN - submissions have been made that the circular which has formed the basis for issuing the show cause notice and the adjudication order is pending consideration before Hon ble Supreme Court and in similar nature matter directions have been given not to take any coercive steps - HELD THAT - In view of the submissions made counter affidavit be filed by the respondents by the next date. List the petition on 22.07.2025.

Summary

The Allahabad High Court, presided by Chief Justice Arun Bhansali and Justice Kshitij Shailendra, addressed a petition challenging a show cause notice issued under Section 74 of the Central Goods and Services Tax Act, 2017, based on Circular No. 80/54/2018-GST dated 31.12.2018 by the Tax Research Unit. The petitioner contended that the Delhi High Court, in Association of Technical Textiles Manufacturers and Processors v. Union of India (16.11.2023), had set aside the circular, though the Union of India's special leave petition against that order is pending and stayed. Additionally, in Al-Hadm Agro Food Products Pvt Ltd v. Union of India (21.11.2023), the Delhi High Court directed authorities not to rely on the circular.The Madras High Court initially aligned with the Delhi High Court's view but was later reversed by its Division Bench in Union of India v. Jenefa India (2024), with a special leave petition pending before the Supreme Court, which on 18.03.2024 ordered no coercive action against petitioners.The Court noted that since the circular's validity is under Supreme Court consideration and the dispute concerns classification of goods-not suppression under Section 74-the issuance of the show cause notice is questionable. Consequently, the Court restrained respondents from taking any coercive recovery measures pursuant to the impugned order dated 03.02.2025, directed filing of a counter affidavit, and listed the matter for further hearing on 22.07.2025.