GST authorities cannot be directed to decide cases in stages: Kerala HC

Deputy Commissioner (Intelligence) Vs Minimol Sabu (Kerala High Court)

Kerala High Court, in Deputy Commissioner (Intelligence) v. Minimol Sabu, ruled that GST adjudicating authorities cannot be compelled to decide cases in stages. The case originated when the assessee, engaged in the sale of gold, silver, and diamond ornaments, challenged a show cause notice under Section 74 of the CGST/SGST Act, alleging suppression of outward supply. The Single Judge had directed authorities to first decide the preliminary issue regarding a portion of the alleged suppressed turnover belonging to a separate entity. The State appealed, arguing that the GST framework does not allow piecemeal adjudication.

Upon review, the Division Bench held that Section 74 mandates a complete adjudication process by the proper officer, within a five-year time frame. The statute does not provide for staged determinations, and adjudicating matters in parts could disrupt statutory timelines, potentially harming both the Revenue and the assessee due to interest accumulation. The court also emphasized that granting partial adjudication requests could set a precedent leading to procedural delays.

Relying on P. Maheswari v. Delhi Administration (1983) 4 SCC 293, the court reiterated that High Courts should refrain from intervening in taxation matters at a preliminary stage unless there is a jurisdictional defect. The writ jurisdiction under Article 226 cannot be used to direct authorities to adjudicate tax disputes in segments, as this would impede the statutory process and delay resolution.