Rajlaxmi Constructions Ltd Vs Union of India And Others (Orissa High Court)
Summary: The Orissa High Court at Cuttack considered a writ petition filed by M/s Rajlaxmi Constructions Ltd. challenging a Show Cause Notice in Form GST DRC-01 bearing Reference No. ZD2105240238281 dated 28.05.2024 issued under Section 74(1) of the Central Goods and Services Tax Act, 2017 and the Odisha Goods and Services Tax Act, 2017, together with the consequential Order-in-Original dated 16.03.2026 and Summary of Order in Form GST DRC-07 bearing Reference No. ZD2103260110670. The proceedings concerned tax periods April 2019 to March 2020 and raised a total demand of Rs.28,80,95,516/-. The petitioner invoked the extraordinary jurisdiction of the High Court under Articles 226 and 227 of the Constitution of India.
The petitioner contended that the Summary Show Cause Notice dated 28.05.2024 had been issued by the Deputy Commissioner of State Tax, CT&GST Circle, Kendrapada, initiating proceedings under Section 74 of the CGST Act, 2017, based on WAMIS data without taking note of the facts and figures disclosed in the returns. According to the petitioner, the adjudication order was subsequently passed on 16.03.2026 by the Assistant Commissioner of State Tax, CT&GST Circle, Kendrapada, and such course was untenable because the authority which initiated the proceeding could not have had it completed by an authority of a lower rank.
The petitioner further submitted that a reply dated 28.06.2024 had specifically sought a personal hearing before the Deputy Commissioner of State Tax, Kendrapada Circle. It was therefore contended that the Assistant Commissioner could not have passed the order dated 16.03.2026 without affording the requested opportunity of hearing. The petitioner also placed reliance upon Tansam Engineering and Construction Company Versus The Commissioner, CGST and Central Excise Rourkela Commissionerate, 2025 (10) TMI 1116 (Ori), contending that the order dated 16.03.2026 was hit by Section 6(2) of the GST Act because the same transactions had already been taken cognizance of by the CGST Authorities.
The learned Standing Counsel for the CT&GST Organisation did not dispute that the petitioner had not been afforded an opportunity of personal hearing despite having requested one. However, the submission concerning adjudication of the same-sale transactions by the CGST Authorities was opposed.
The High Court recorded that the denial of the requested personal hearing constituted a flagrant violation of the principles of natural justice and that the matter also involved a jurisdictional issue. The Court therefore considered it appropriate to dispose of the writ petition in the light of Janardan Panda Vrs. The Commissioner, Commercial Tax & GST, Odisha and others, 2026 (5) TMI 1084 (Ori).
In the quoted passage from Janardan Panda, the Orissa High Court had found a flagrant violation of natural justice where the adjudicating authority proceeded mechanically, failed to consider the reply to the show cause notice and did not afford an opportunity of hearing. The Court observed that the reply to a show cause notice could not be treated as an empty formality and that the adjudicating authority was required to apply its independent mind and give reasons for discarding or varying the explanation offered. In that case, the orders passed under Sections 73 and 161 of the GST Act were quashed and set aside, with the matter remanded for adjudication on merits after affording reasonable opportunity of hearing.
Applying that approach, the Orissa High Court set aside the order dated 16.03.2026 passed by the Assistant Commissioner of State Tax, CT&GST Circle, Kendrapada under Section 74 of the GST Act. The matter was remitted to the said authority for adjudication on merits after affording the petitioner a reasonable opportunity of hearing. The Court expressly left it open to the petitioner to adduce evidence to justify its claim and observed that the petitioner was at liberty to raise all legal as well as factual issues, which were to be dealt with by the concerned authority in its order.
Thus, the High Court did not finally adjudicate the petitioner’s substantive tax dispute or the contention concerning parallel CGST proceedings. The relief granted was procedural: the impugned adjudication order was set aside and the matter was restored for fresh adjudication after a reasonable opportunity of hearing. The writ petition, along with interlocutory application(s), if any, was accordingly disposed of.
Cases Discussed
- Tansam Engineering and Construction Company Versus The Commissioner, CGST and Central Excise Rourkela Commissionerate, 2025 (10) TMI 1116 (Ori) — relied upon by the petitioner in support of the contention that proceedings concerning the same transactions had already been taken cognizance of by the CGST Authorities and that the impugned proceedings were hit by Section 6(2) of the GST Act.
- Janardan Panda Vrs. The Commissioner, Commercial Tax & GST, Odisha and others, 2026 (5) TMI 1084 (Ori) — followed in disposing of the present matter in light of the admitted violation of natural justice and the denial of an opportunity of hearing.
FULL TEXT OF THE JUDGMENT/ORDER OF ORISSA HIGH COURT
1. Heard Mr. Pranaya Kishore Harichandan, learned counsel appearing for the petitioner, Mr. Satyanarayan Pattnaik, learned Central Government Counsel appearing for opposite party No.1, Mr. Jayant Kumar Bal, learned Additional Government Advocate appearing for opposite party No.2 and Mr. Sunil Mishra, learned Standing Counsel appearing for opposite party Nos.3, 4 and 5.
2. Challenging Show Cause Notice in Form GST DRC-01 bearing Reference No. ZD2105240238281 dated 28.05.2024 issued by the Opposite Party No. 5 under Section 74(1) of the Central Goods and Services Tax Act, 2017 / Odisha Goods and Services Tax Act, 2017 along with the Annexure thereto, and the consequent Order-in-Original passed by the Opposite Party No. 4 under Section 74(9) read with Rule 142(5) of the CGST/OGST Rules, 2017, vide Annexure to Assessment Order dated 16.03.2026, read with Summary of Order in Form GST DRC-07 bearing Reference No. ZD2103260110670 dated 16.03.2026, raising a total demand of Rs.28,80,95,516/- pertaining to the tax periods April 2019 to March 2020 (Financial Year 2019-20), along with all consequential proceedings arising therefrom, the petitioner has approached this Court invoking extraordinary jurisdiction under Articles 226 and 227 of the Constitution of India.
3. It is submitted by Sri Pranaya Kishore Harichandan assisted by Sri Pragyant Harichandan, learned Advocates for the petitioner submitted that while the Summary Show Cause Notice dated 28.05.2024 has been issued by the Deputy Commissioner of State Tax, CT&GST Circle, Kendrapada initiating proceeding under Section 74 based on WAMIS data without taking note of fact and figure disclosed in the returns, the order has come to be passed after around two years, i.e., 16.03.2026 by Assistant Commissioner of State Tax, CT&GST Circle, Kendrapada. Such course is untenable inasmuch as the authority who initiated proceeding could not have been completed by an authority of a rank below.
3.1. He further submitted that though the petitioner had filed reply dated 28.06.2024 seeking for personal hearing of the matter before the Deputy Commissioner of State Tax, Kendrapada Circle, it is un-understandable as to how the Assistant Commissioner of State Tax of the said Circle usurping jurisdiction without affording any opportunity of hearing passed the order dated 16.03.2026.
3.2. Heavy reliance has been placed on Tansam Engineering and Construction Company Versus The Commissioner, CGST and Central Excise Rourkela Commissionerate, 2025 (10) TMI 1116 (Ori) to contend that the order dated 16.03.2026 is hit by provisions of Section 6(2) of the GST Act as self-same transactions which are dealt in the order dated 16.03.2026 had already been taken cognizance of by the CGST Authorities.
4. Sri Sunil Mishra, learned Standing Counsel for the CT&GST Organisation could not dispute the fact that the petitioner was not afforded the opportunity of personal hearing, though asked for; yet he vehemently opposed the argument advanced with respect to adjudication of self-sale transactions by the CGST Authorities.
5. Heard the counsel for respective parties.
6. Since it is admitted that there was flagrant violation of principles of natural justice and the matter involves jurisdictional issue, it is deemed appropriate to dispose of this writ petition in the light of Janardan Panda Vrs. The Commissioner, Commercial Tax & GST, Odisha and others, 2026 (5) TMI 1084 (Ori). It has been observed in the said case as follows:
“6.3. This Court hence perceives that the action of the authority is in flagrant violation of principles of natural justice and on perusal of documents enclosed with the writ petition it is ex facie clear that the Assistant Commissioner of State Tax, Kalahandi Circle, Bhawanipatna-opposite party no.2 has mechanically proceeded to adjudicate the transactions under Section 73 of the GST Act. Ergo, the order dated 26th December, 2025 and 6th January, 2026 cannot be held to be tenable in the eye of law for want of affording an opportunity of hearing to the petitioner and non-consideration of reply to show cause notice. Reply to show cause notice cannot be said to be empty formality or useless lumber. The points raised by way of reply to show cause notice does not find place in the order impugned; as such the orders of the adjudicating authority smacks arbitrariness. It does not require any authority to cite to say that the adjudicating authority even in the absence of petitioner need to ascribe reason for discarding or varying with the explanation proffered in the reply to show cause notice. In absence of independent application mind, this Court cannot sustain the impugned order. Accordingly, the order dated 26th December, 2025 passed under Section 73 (Annexure-1) and the order dated 6th January, 2026 passed under Section 161 of the GST Act (Annexure-2) by the Deputy Commissioner of State Tax, Kalahandi Circle, Bolangir are quashed and set aside. The matter deserves to be remanded to the said authority for adjudication on merit after affording reasonable opportunity of hearing to the petitioner. It is open for the petitioner to adduce evidence to justify his claim.”
7. In the wake of the above discussion, the order dated 16.03.2026 passed by the Assistant Commissioner of State Tax, CT&GST Circle, Kendrapada under Section 74 of the GST Act (Annexure-6) stands set aside and the matter is remitted to the said authority for adjudication on merit after affording reasonable opportunity of hearing to the petitioner. It is open for the petitioner to adduce evidence to justify his claim. It needs no comment that the petitioner is at liberty to raise all legal issues as also factual issues, which shall be dealt with by the authority concerned in his order. Accordingly, the writ petition along with interlocutory application(s), if any, is disposed of.
