Case Law Details
Sumukha Ventures Vs Joint Commissioner of Commercial Taxes (ADMN.) (Karnataka High Court)
The Karnataka High Court considered a petition challenging an Order-in-Original and a show-cause notice issued in GST proceedings. The petitioner argued that proceedings had been initiated both by the audit authority and the enforcement authority. It was further contended that the same officer who conducted the audit proceedings had also passed the Order-in-Original. According to the petitioner, this violated the principles of natural justice because the officer had already expressed opinions and recorded findings during the audit stage, which could influence the subsequent adjudication proceedings.
The petitioner also relied on Circular No.31/05/2018-GST dated 09.02.2018 and Circular No.169/01/2022-GST dated 12.03.2022, contending that such a procedure was not permissible under assessment proceedings conducted by the Central Authority. The State opposed the petition by arguing that the petitioner had not raised the objection before the authority earlier and that the issue should first be considered by the adjudicating authority. It was also argued that the cited circulars applied only to Central Authorities and were not binding on State Authorities in the absence of a similar notification.
The High Court observed that identical issues were frequently being raised by assessees and held that the matter required adjudication by the appropriate authority. The Court kept all contentions open and remitted the matter to respondent No.2 for reconsideration. The petitioner was permitted to raise objections regarding jurisdiction before the authority concerned. The Court further observed that the authority could obtain necessary administrative orders from the Joint Commissioner of Commercial Taxes (Administration), who had assigned the case.
FULL TEXT OF THE JUDGMENT/ORDER OF KARNATAKA HIGH COURT
The petitioner has called in question the validity of the Order-in-Original at Annexure-B. The petitioner has also challenged the validity of the show-cause notice dated 30.09.2025.
2. Learned counsel for the petitioner would submit that there were proceedings initiated by the audit authority as well as the enforcement authority. It is submitted that even otherwise the Order-in-Original at Annexure-B is passed by the same officer who has conducted the audit proceedings. It is submitted that such action is impermissible and being in violation of principles of natural justice, insofar as the authority while conducting audit has expressed its opinion and findings are recorded at one stage. It is submitted that once again if the same officer were to conduct the assessment proceedings, the authority would be guided by the findings made in the audit report.
3. It is further submitted that such procedure is not permissible under the assessment proceedings by the Central Authority in terms of Circular No.31/05/2018-GST dated 09.02.2018 at Annexure-AB as well as Circular No.169/01/2022-GST dated 12.03.2022 at Annexure-AC.
4. Learned Additional Government Advocate appearing for the respondents would submit that the petitioner has not raised such objection before the authority and hence, the point raised now ought to be relegated to be decided by the adjudicating authority.
5. Learned counsel for the petitioner on the other hand would submit that the adjudicating authority having been assigned with a case has no power to rule on jurisdiction as the same would overlap with the aspect of assignment by the Joint Commissioner.
6. Learned AGA submits that the circulars referred to by the petitioner relates to proceedings under the Central Authority and in the absence of any notification on same lines, the State Authorities are not bound by such procedure.
7. Taking note that this identical question is often raised by assessees, it would be appropriate that this aspect has the benefit of adjudication by the appropriate authority. By keeping open all contentions raised, the matter is remitted to respondent No.2.
8. The petitioner to take their stand before respondent No.2, regarding the aspect of jurisdiction as raised in the present petition. Upon such objection being raised, it is open for the authority to obtain necessary orders on the administrative side from the authority which assigns i.e., the Joint Commissioner of Commercial Taxes (Administration) – respondent No.1.
9. Taking note of the nature of objection raised, the authority to record a finding of their aspect of jurisdiction as per the procedure referred to above and only thereafter, consider the proceedings on merits. All contentions of the petitioner regarding such aspect of jurisdiction including as raised herein are kept open to be adjudicated.
10. Accordingly, the order at Annexure-B is set aside. Matter is remitted to be reconsidered in light of the observations made herein. Needless to state, no steps to be taken on merits till finding is recorded in terms of the observations made.
Accordingly, petition is disposed of.
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