C M Hydro Systems Private Limited Vs ACIT & Others (Telangana High Court)
Background
The petitioner challenged a show-cause notice dated 13.03.2025 and an order dated 03.05.2025 passed under Section 73 of the GST Act for Financial Year 2024–25.
The petitioner contended that Section 73 was not applicable to FY 2024–25 and that proceedings, if warranted, ought to have been initiated under Section 74A of the Act.
Revenue’s Submissions
The State Tax Department fairly conceded that the order ought to have been passed under Section 74A. However, it argued that the reference to Section 73 was merely a technical error and that the order could be treated as one passed under Section 74A.
High Court’s Decision
The Division Bench, comprising Acting Chief Justice P. Sam Koshy and Justice Suddala Chalapathi Rao, held that Section 73, as applicable to the proceedings in question, did not extend to FY 2024–25. Accordingly, the impugned order could not be sustained under that provision.
The Court set aside the impugned order and allowed the writ petition. However, it left the Revenue at liberty to initiate appropriate proceedings against the petitioner, if so advised, strictly in accordance with law. No order as to costs was passed.
Key Takeaway
The judgment highlights the importance of invoking the legally applicable statutory provision while initiating GST adjudication proceedings. An order passed under an inapplicable provision cannot be sustained merely by treating the incorrect statutory reference as a technical error.
The ruling does not prevent the Department from initiating fresh proceedings under the appropriate provision in accordance with law.
FULL TEXT OF THE JUDGMENT/ORDER OF TELANGANA HIGH COURT
Heard Sri V. Sai Amit, learned counsel appearing for the petitioner and Sri Swaroop Oorilla, learned Special Government Pleader for State Tax appearing for the respondents.
2. This Writ Petition has been filed assailing the show-cause notice dated 13.03.2025 and the order dated 03.05.2025 passed by respondent No.1 under Section 73 of the Goods and Services Tax Act (hereinafter referred to as “the Act”).
3. At the outset, learned counsel for the petitioner submits that the impugned order could not have been passed under Section 73 of the Act, for the reason that the said provision applies only to financial years upto 2023–24, whereas the financial year involved in the instant case is 2024–25. He, therefore, submits that the impugned order could not have been passed under Section 73 of the Act and that, if the authorities intend to initiate proceedings against the petitioner, such proceedings ought to have been initiated under Section 74A of the Act.
4. Per contra, learned Special Government Pleader appearing for the respondents, while fairly conceding that the impugned order ought to have been passed under Section 74A of the Act, submits that the reference to Section 73 of the Act was due to a technical error and that the impugned order may be construed as the one passed under Section 74A of the Act.
5. Be that as it may, considering the fact that the impugned order has been passed under Section 73 of the Act, this Court is of the considered opinion that the same could not have been passed under the said provision, as the financial year involved in the instant case is 2024–25, whereas Section 73 of the Act, as applicable to the present proceedings, does not extend to the said financial year.
6. In view of the above, the impugned order is liable to be set aside and is accordingly set aside. However, it is left open to the respondents to initiate appropriate proceedings against the petitioner, if so advised, strictly in accordance with law.
7. Accordingly, the Writ Petition is allowed. There shall be no order as to costs.
Miscellaneous applications, if any pending, shall stand closed.
