Athreya Constructions Vs Additional Commissioner of Central Tax And Others (Karnataka High Court)
The Karnataka High Court heard the petitioner’s request for an interim order in a writ petition challenging an adjudication order passed under Section 74 of the Central Goods and Services Tax Act, 2017 and the State Goods and Services Tax Act, 2017.
The petitioner’s statutory appeal against the adjudication order had been dismissed on the ground of limitation. The petitioner thereafter invoked the High Court’s jurisdiction, primarily contending that the adjudication order lacked jurisdiction and was also passed in violation of the principles of natural justice.
The Court noted that the petitioner had been issued an Intimation in Form DRC-01A on 18.03.2021 referring to a search conducted at the petitioner’s premises on 10.11.2020 and the reversal of Input Tax Credit (ITC) amounting to ₹3,58,36,268 on 02.12.2020. According to the petitioner, a response had been submitted mentioning the reversal of ITC together with the calculation of interest and penalty at 15%. Despite this, a show cause notice was issued proposing levy of interest and penalty on an amount that included the ITC already reversed, resulting in the impugned adjudication order.
On behalf of the petitioner, it was submitted that the proceedings had been initiated only to fasten liability for interest and penalty despite the reversal of ITC along with interest and penalty, which was stated to be contrary to the scheme of Section 74 of the Act. Reliance was placed on Sections 74(6) and 74(7) to contend that the adjudicating authority, if at all it had jurisdiction, could have exercised it only under Section 74(7) and not under Section 74(6), rendering the entire proceedings vitiated.
