Case Law Details
Yash Innovative Solution LLP Vs Joint Commissioner (Bombay High Court)
GST Demand Held Invalid Because Adjudication Order Went Beyond SCN Proposals; Bombay High Court Quashes GST Order for Ignoring Exemption Claim Under Notification 12/2017; GST Adjudication Order Set Aside Because Section 75(7) Was Violated; High Court Allows Writ Petition Despite Alternate GST Appeal Remedy Due to Jurisdictional Defect; GST Demand of ₹2.06 Crore Quashed Because SCN Proposed Only ₹57 Lakh; Bombay High Court Remands GST Matter Because Exemption Plea Was Not Examined.
The Bombay High Court in Yash Innovative Solution LLP Vs Joint Commissioner quashed both a show cause notice and an adjudication order issued under Section 73(1) of the Maharashtra Goods and Services Tax Act, 2017, holding that a tax demand exceeding the proposals contained in the show cause notice and failure to consider exemption claims rendered the proceedings unsustainable. The petitioner, a Limited Liability Partnership providing project management consultancy services to government bodies and public institutions relating to water supply, sewage, roads, and waste management, was subjected to scrutiny under Section 61 of the MGST Act for alleged mismatch between turnover reflected in GSTR-7 and GSTR-3B returns. The petitioner responded that there was no mismatch and contended that the services rendered were exempt from GST under Notification No. 12/2017 dated 28.06.2017 issued under Section 11(1) of the CGST Act.
Subsequently, a show cause notice dated 18.06.2025 proposed unpaid tax demand of Rs.57.55 lakh based on TDS turnover reflected in GSTR-2A. The petitioner replied explaining the nature of services and also provided details of GST already paid on taxable services. However, the adjudication order dated 26.12.2025 imposed total liability of Rs.2.06 crore including tax, interest, and penalty.
The petitioner challenged both the show cause notice and adjudication order before the High Court under Article 226 of the Constitution, contending that the proceedings violated principles of natural justice and were without jurisdiction. The respondents opposed the petition on the ground that an alternate statutory remedy of appeal under Section 107 of the CGST Act was available and argued that adequate hearing opportunity had been provided.
The High Court referred to the Supreme Court decision in Godrej Sara Lee Ltd. v. Excise and Taxation Officer-cum-Assessing Authority and reiterated that writ jurisdiction can be exercised despite availability of alternate remedies where there is violation of natural justice or lack of jurisdiction. The Court further relied upon the statutory mandate under Section 75(7) of the GST law, which provides that the amount of tax, interest, and penalty confirmed in the adjudication order cannot exceed the amount specified in the show cause notice and cannot be based on grounds not mentioned in the notice.
Applying these principles, the Court observed that while the show cause notice proposed demand of Rs.57.55 lakh, the adjudication order imposed liability exceeding Rs.2.06 crore. The Court held that such enhancement was contrary to Section 75(7) and therefore unsustainable in law.
The Court also noted that the petitioner’s specific plea regarding GST exemption for services rendered to State Government departments, undertakings, and corporations under Notification No.12/2017 had not been considered by the adjudicating authority while passing the impugned order. The omission to examine the exemption claim constituted an additional ground rendering the adjudication order unsustainable.
Accordingly, the Bombay High Court quashed both the show cause notice dated 18.06.2025 and the adjudication order dated 26.12.2025. The matter was remanded to the adjudicating authority for fresh consideration on merits after providing an opportunity of hearing to the petitioner. The Court permitted the respondents to issue an additional demand notice and directed completion of proceedings within eight weeks.
FULL TEXT OF THE JUDGMENT/ORDER OF BOMBAY HIGH COURT
Rule. Rule made returnable forthwith and heard finally with the consent of parties.
2. This petition, filed under Article 226 of the Constitution seeks following prayers :
“A. The Hon’ble High Court may be pleased to issue appropriate writ, order or direction in the nature of writ and thereby quash and set aside the impugned order dated 26.12.2025 passed by the Respondent No.2 under Section 73 (1) of the Maharashtra Goods and Services Tax Act, 2017 for the Financial Year 2021-22.
B. The Hon’ble High Court may be pleased to issue appropriate writ, order or direction in the nature of writ and thereby quash and set aside the show cause notice dated 18.06.2025 issued by the Respondent No.2 under Section 73 (1) of the Maharashtra Goods and Services Tax Act, 2017 for the Financial Year 2021-22.”
3. The petitioner is a Limited Liability Partnership which is providing project management consultancy services to the Maharashtra Jeevan Pradhikaran, Maharashtra State Road Transport Corporation, local municipal bodies and various other Government institutions for the purpose of water sewage, solid waste management, roads and other incidental and ancillary consultancy. The petitioner’s case was selected for scrutiny under Section 61 of the MGST Act and accordingly, notice dated 07.05.2024 was issued to the petitioner for difference of the return deducted under GSTR 7 by the tax deductor and turnover shown by the petitioner under Form GSTR 3B.
The petitioner submitted its reply along with its supporting documents demonstrating that there was no mismatch and that the services provided by the petitioner were exempted from tax.
Thereafter a show cause notice dated 18.06.2025 was issued to the petitioner stating that the TDS turnover as per GSTR 2A returns was Rs. 3,19,75,708/- and the unpaid tax on the same was Rs. 57,55,627/-.
The petitioner replied the show cause notice on 16.07.2025 explaining that the services provided by the petitioner to the Municipal Corporation, Aurangabad was due to misconception. The petitioner also gave the details of GST paid on taxable services provided by it.
By the impugned adjudication order dated 26.12.2025, tax liability of Rs. 2,06,46,142/- including interest and penalty is imposed on the petitioner. Hence, the present petition.
4. Thereafter, after hearing the petitioner, adjudication order was passed on 26.12.2025 thereby directing the petitioner to pay the total amount of Rs. 2,06,46,142/-. Petitioner is aggrieved by the show cause notice and the adjudication order.
5. Heard learned advocate for the petitioner. He assailed the show cause notice and the impugned adjudication order stating that both are issued in utter violation of principles of natural justice and both are without jurisdiction. In support of his submission, reliance is placed on the decisions of Division Bench judgment of Allahabad High Court and Single Bench decision of Madras and Karnataka High Court.
6. Learned AGP for the respondents has strenuously opposed the petition arguing that the petitioner has alternate and efficacious remedy of filing appeal under Section 107 of the CGST Act and therefore, according to him the petition should not be entertained. He further submits that opportunity of hearing was given to the petitioner and therefore, there is no merit in the submission of the petitioner that principles of natural justice are not followed.
7. In reply to the ground of maintainability of the writ petition, learned advocate for the petitioner has relied upon Godrej Sara Lee Ltd. The Excise and Taxation Officer-cum-Assessing Authority and Ors.; AIR 2023 SC 781.
8. Heard learned advocate for the petitioner and learned AGP at length. Perused the record and the citations relied upon.
9. In Godrej Sara Lee Ltd. (Supra) the Apex Court on the point of maintainability of the writ petition, wherein alternate efficacious remedy is available, has held that;
“6. At the end of the last century, this Court in paragraph 15 of the its decision reported in (1998) 8 SCC 1 (Whirlpool Corporation vs. Registrar of Trade Marks, Mumbai and Others) carved out the exceptions on the existence whereof a Writ Court would be justified in entertaining a writ petition despite the party approaching it not having availed the alternative remedy provided by the statute. The same read as under:
(i) where the writ petition seeks enforcement of any of the fundamental rights
(ii) where there is violation of principles of natural justice;
(iii) where the order or the proceedings are wholly without jurisdiction; or
(iv) where the vires of an Act is challenged.”
10. In the decisions relied upon by the petitioner, it is held that, “Section 75 of the said Act deals with general provisions relating to determination of tax and sub-Section (7) specifically stipulates that the amount of tax, interest and penalty demanded in the order shall not be in excess of the amount specified in the notice and no demand shall be confirmed on the grounds other than the grounds specified in the notice.” We are in respectful agreement with the aforesaid proposition.
11. Applying this ratio to the facts of the present case, it is clear that in the impugned notice a demand of Rs. 57,55,627.44/- is made to the petitioner. In the impugned adjudication order, a liability of payment of Rs. 2,06,46,142/- which includes tax plus interest plus penalty is imposed on the petitioner.
12. Since the same is contrary to the provision sub-Section (7) of Section 75, the impugned notice and the adjudication order cannot be sustained in the facts of the present case.
13. Another ground raised by the petitioner in reply to the show cause notices that petitioner is rendering services to the State Government or Government Undertaking or Corporation, etc. which are exempted and therefore as per Notification No. 12/2017 dated 28.06.2017, it is exempted from paying the taxes under Section 11(1) of the CGST Act, is not considered by the respondent while passing the impugned adjudication order. The impugned order is unsustainable on this ground also.
14. In the result, Writ Petition succeeds. The impugned show cause notice dated 18.06.2025 as well as the impugned order dated 26.12.2025 are hereby quashed and set aside.
15. The matter is remanded back to respondent No. 2 for consideration on merits in accordance with law after giving opportunity of hearing to the petitioner. The said exercise shall be completed within eight (8) weeks from the date of receipt of copy of this order.
16. Respondents are permitted to issue additional demand notice to the petitioner.
17. Rule is made absolute in the above terms.
18. The Writ Petition is disposed of.
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