Maa Vindhya Vasini Tobacco Private Limited Vs State of U.P. And 2 Others (Allahabad High Court)
The Allahabad High Court has stayed adjudication proceedings against Maa Vindhya Vasini Tobacco Private Limited, which challenged the levy of Goods and Services Tax (GST) calculated on a compounded basis using assumed manufacturing capacity.
The core contention of the petitioner is that the pre-existing concept of compounded levy based on deemed manufacture, as calculated by manufacturing capacity under the former Central Excise Act, lacks any statutory mandate under the current GST regime. The petitioner argued that the adjudication notice, issued solely on the premise of assumed manufacturing capacity, is consequently without jurisdiction.
The Court, after hearing the submissions, found that a “prima facie jurisdiction issue does appear to exist.” Furthermore, the bench noted that the issue is purely legal and “may have wider ramifications in other cases as well,” potentially leading to repetitive causes of action.
Consequently, the High Court elected to entertain the writ petition and ordered a stay on the adjudication proceedings initiated by the show cause notice dated December 4, 2024, until the next date of listing. The court granted the revenue four weeks to file a counter affidavit, effectively ensuring the matter is decided on the substantive legal question regarding the validity of this taxation methodology under GST law. No specific judicial precedent was cited in the body of this order; the court itself recognized the novelty and breadth of the legal issue.
