MR Steels Vs Deputy Commissioner of State Tax

FULL TEXT OF THE JUDGMENT/ORDER OF TELANGANA HIGH COURT

Learned counsel Sri Priyojeet Chattedee, representing learned counsel Sri Mohd. Mukhairuddin, appears for the petitioner through video conferencing.

Sri Swaroop Oorilla, learned Special Government Pleader for State Tax, appears for the respondents.

2. Heard the learned counsel for the parties.

3. Both the writ petitions relate to the same petitioner and the issues are also common.

4. The petitioner has assailed the show cause notice dated 11.09.2025 for the tax period April 2023 to March 2024 as violative of Articles 265 and 14 of the Constitution of India and the provisions of the Telangana Goods and Services Tax Act, 2017 (hereinafter referred to as, “the Act”) and the rules made thereunder in W.P.No.34743 of 2025.

In W.P.No.34748 of 2025, the petitioner has assailed the show cause notice of the same date for the tax period April 2021 to March 2022 on the same grounds.

5. In these writ petitions, the impugned show cause notices were preceded by a search on the premises of the petitioner during which certain documents/data were seized for the relevant financial years. The petitioner contends that the seizure was without any panchanama, except loosely recording the documents in a piece of paper which were not even signed. Reference is made to Rule 139 of the Telangana Goods and Services Tax Rules, 2017, which prescribes the procedure for undertaking the search and seizure in Form GST INS-02. The petitioner submitted documents pertaining to the said financial years in the nature of audited balance sheets, bank statements, sales registers, purchase registers, stock statements etc. Without an opportunity of personal hearing and without scrutinising all the returns filed by the petitioner under Section 61 of the Act, the impugned show cause notices were issued proposing to levy a tax demand of Rs.83,73,766/- in W.P.No.34743 of 2025 and Rs.73,18,005.25 in W.P.No.34748 of 2025. The petitioner has assailed the impugned show cause notices as being patently illegal and beyond the provisions of the Act. Further grounds have been raised relying upon the provisions of Sections 7 and 16 of the Act, in order to submit tha: the proposed demand is in teeth of Article 265 of the Constitution of India.

6. Learned counsel for the petitioner has relied upon the decision of the Gauhati High Court in M/s. Pepsico India Holdings Pvt. Ltd. v. Union of India]. and submitted that without proper scrutiny of the returns under Section 61 of the Central Goods and Services Tax Act, 2017, read with Rule 99 of the Central Goods and Services Tax Rules, 2017, the show cause notice under Section 73 of the Act based on discrepancies noticed in the returns filed could not have been issued.

7. Learned Special Government Pleader appearing for the respondents has opposed the prayer and submits that the impugned show cause notices based on search and seizure concerning the petitioner’s company were also the subject matter of W.P.No.34190 of 2025. It is submitted that the said writ petition was permitted to be withdrawn with liberty to the petitioner to pursue the assessment proceedings by furnishing its reply taking all grounds of facts and law as are available to it vide order dated 12.11.2025. The impugned show cause notices are assailed on the same grounds herein. It is submitted that the jurisdiction to issue show cause notice under Section 73 of the Act cannot be questioned on those grounds. He has relied upon the decision in Special Director v. Mohd. Ghulam Ghouse², wherein the Apex Court in paragraph 5 therein has held that unless the High Court is satisfied that the show cause notice was totally non est in the eye of the law for absolute want of jurisdiction of the authority to even investigate into facts, writ petitions should not be entertained for the mere asking as a matter of routine, and the writ petitioner should invariably be directed to respond to the show cause notice and take all stands highlighted in the writ petition. Whether the show cause notice was founded on any legal premises, is a jurisdictional issue which can even be urged by the recipient of the notice and such issues also can be adjudicated by the authority issuing the very notice initially, before the aggrieved could approach the court. It is submitted that a Coordinate Bench of this Court has, following the aforesaid decision, refused to interfere in the show cause notice in W.P.No.16266 of 2023 vide judgment dated 28.10.2024. Since similar issues are involved in the present cases as that of the same petitioner in the other writ petition in W.P.No.34190 of 2025, this Court may refuse to interfere in the matter. The petitioner may be given liberty to pursue the assessment proceedings by taking all available grounds of law and facts.

8. On consideration of the rival submissions of the parties and the limited gamut of facts relevant for appreciation of the challenge raised herein and also the decisions cited by the learned counsel for the parties, we are of the view that the impugned show cause notices have been issued by the proper officer pursuant to the search and seizure proceedings carried out during investigation. The grounds of non-compliance of Section 61 of the Act or lack of enough opportunity to submit the documents upon search and seizure can all be taken before the adjudicating officer by the petitioner. Therefore, on the previous occasion, this Court had permitted the petitioner to withdraw the writ petition and to pursue the assessment proceedings by taking all grounds of facts and law as are available to it. In the circumstances, no different view should be taken.

9. Accordingly the writ petitions are dismissed. The petitioner is at liberty to take all such available grounds of law and facts before the adjudicating officer in reply to the impugned show cause notices. There shall be no order as to costs.

Miscellaneous applications pending, if any, shall stand closed.

Notes:- 

¹ 2025 (9) TM I 1593

² (2004) 3 SCC 440