2025 (7) TMI 1245 - HC - GST

Challenge to impugned order - Parallel orders - passing two orders one by the Central Authority on 05.12.2023 and other by the State Authority on 20.02.2024 - HELD THAT - This Court has already passed an order in Tvl.Varadhan Infraastructure vs. The Special Secretary 2024 (3) TMI 1216 - MADRAS HIGH COURT . There a cautious order was passed wherein the interest of the assessee and the revenue was balanced holding that while quashing the impugned proceedings there shall be a direction to the Central Authority/State Authority as the case may be to whom the respective petitioners have been assigned for administrative purpose to initiate appropriate proceedings afresh against them strictly in accordance with the provisions of the respective GST Enactments and GST Enactments Rules and Circular issued thereunder. The time between the initiation of the proceedings impugned in these writ petitions and time during the pendency of the present writ petitions till the date of receipt of this order shall stand excluded for the purpose of computation of limitation. However it is informed that the aforesaid order has been stayed by the Hon ble Division Bench of this Court in W.A.No.1805 of 2024 dated 28.06.2024. It also appears that Kerala High Court has also taken a contrary view - Even if the petitioner s appeal against the order dated 05.12.2023 is allowed the proceedings initiated against the petitioner by the respondent under whom the petitioner is being assessed cannot be challenged on the ground of jurisdiction. The impugned order dated 20.02.2024 set aside on terms subject to the petitioner depositing 15% of the disputed tax as the petitioner would have already deposited 10% of the disputed tax at the time of filing an appeal against the order dated 05.12.2023 - petition disposed off.

Summary

ISSUES:

• Whether two separate orders for the same assessment year, one by the Central Authority and another by the State Authority, can be validly passed.
• Whether the proceedings initiated by the State Authority can be challenged on the ground of jurisdiction after an appeal is filed against the Central Authority's order for the same period.
• Appropriate conditions for quashing the impugned order passed by the State Authority.
• Timeframe and procedural directions for disposal of appeals and fresh proceedings in GST assessment matters.

RULINGS / HOLDINGS:

• The Court held that there is "no justification in passing two orders" by both Central and State Authorities for the same assessment period, implying such dual orders are impermissible.
• Proceedings initiated by the State Authority cannot be challenged on the ground of jurisdiction even if the appeal against the Central Authority's order is allowed.
• The impugned order dated 20.02.2024 passed by the State Authority is set aside on the condition that the petitioner deposits 15% of the disputed tax, considering the petitioner has already deposited 10% at the time of filing appeal against the Central Authority's order.
• The impugned order shall be treated as a corrigendum to the notice in Form GST DRC 01, and the petitioner is directed to file a reply within 30 days along with the pre-deposit.
• The respondent is directed to pass a fresh order on merits and in accordance with law within three months after hearing the petitioner.
• The appeal filed by the petitioner against the Central Authority's order is also directed to be disposed of within three months from the date of receipt of the Court's order.

RATIONALE:

• The Court applied the principles laid down in a prior batch of cases balancing the interest of the assessee and revenue, referencing a cautious order that mandated initiation of fresh proceedings "strictly in accordance with the provisions of the respective GST Enactments and GST Enactments Rules and Circular issued thereunder."
• The Court acknowledged the stay on the prior order by the Division Bench and noted differing views from other High Courts, indicating ongoing judicial divergence on the issue.
• The decision reflects a pragmatic approach to avoid multiplicity of proceedings and to ensure fair opportunity to the petitioner while safeguarding revenue interests through conditional pre-deposit requirements.
• The directions for expeditious disposal of appeals and fresh proceedings underscore the Court's intent to reduce prolonged litigation and ensure timely resolution in GST assessment disputes.