Case Law Details
Dott Services Limited Vs State of Telengana (Telangana High Court)
Telangana High Court recently ruled on a contentious issue involving Dott Services Limited and the State of Telangana’s Goods and Services Tax Department. This case highlights the complexities arising from parallel proceedings under state and central GST laws.
The crux of the matter revolved around a Demand Order issued by the State GST Department against Dott Services Limited for the tax period July 2017 to March 2018. However, the petitioner challenged this order primarily on the grounds of duplicity of action. They argued that the Central GST Authority had already initiated proceedings and passed an Order-in-Original on the same matter.
During the proceedings, the petitioner contended that the state authorities were duly informed about the actions of the Central Authority. Furthermore, they emphasized the lack of necessity for subsequent proceedings when the matter had already been concluded at the central level.
The State Government, in its defense, cited procedural irregularities and lack of timely information from the petitioner’s side. However, the Court observed that such arguments were untenable given the circumstances of the case.
In its judgment, the Telangana High Court relied on Section 6 of the CGST Act, which prohibits subsequent proceedings on the same set of facts and issues once finalized by the Central Authority. The Court found merit in the petitioner’s argument and consequently set aside the Demand Order dated December 30, 2023.
FULL TEXT OF THE JUDGMENT/ORDER OF TELANGANA HIGH COURT
Heard Mr. Kailash Nath P.S.S., learned counsel for the petitioner; Mr. Swaroop Oorilla, learned Special Government Pleader for State Tax appearing for respondent Nos.1 to 3 and Mr. Dominic Fernandez, learned Senior Standing Counsel for CBIC, for respondent No.4. Perused the entire record.
2. The challenge in the present writ petition is to the Demand Order DRC-07, dated 30.12.2023, for the tax period July, 2017 to March, 2018 under the Telangana Goods and Services Tax Act, 2017 (‘TGST Act’) and Central Goods and Services Tax Act, 2017 (‘CGST Act’).
3. One of the primary contentions raised by the petitioner in assailing the Demand Order is on the ground that the impugned action being bad for the reason that for the same cause of action, the Central Authority i.e., respondent No.4 has already initiated action and has passed the Order-in-Original on 31.10.2023. It has also been informed that the order passed by respondent No.4 is already under challenge before this Court in W.P.No.1357 of 2024 and where there is also an interim order granted by this very Bench on 12.01.2024. In view of the aforesaid developments, learned counsel for the petitioner submits that under the provisions of Section 6 of CGST Act, the Demand Order now been issued by respondent No.2 is per se bad, illegal and unsustainable.
4. On the previous date of hearing, we have directed the State counsel to seek instructions as to how the subsequent proceedings by the State Authorities would be maintainable.
5. Today, learned Special Government Pleader for State Tax enters appearance and makes his submission that there appears to be lack of information to the State Authorities being provided from the petitioner side in respect of the Order-in-Original passed by respondent No.4. He further submits that there also appears to be no timely information provided by the petitioner in respect of the order passed by respondent No.4 before the impugned order was passed. Therefore, the impugned order has been passed.
6. It was also the contention of the learned State counsel that the Central Government has issued a Circular dated 23.11.2023 vide Circular No.4 of 2023, which mandates that the orders passed in original have to be uploaded electronically on the portal so far as legal enforceability is concerned. Learned counsel further contended that in the instant case, as the order has since been not uploaded, the action on the part of the State Authorities cannot be found fault with.
7. Considering the provisions of Section 6 of CGST Act, what is apparently evident is that once when the proceedings have already been drawn and finalized on the same set of facts and issue, there cannot be subsequent proceedings again drawn. Undisputedly, in the instant case, respondent No.4 had already initiated proceedings and had concluded the same by passing the Order-in-Original on 31.10.2023. The said order has also been assailed by the assessee before this Court in W.P.No.1357 of 2024 and there also appears to be an interim order granted by this Court on 12.01.2024.
8. Given the said facts and circumstances of the case and in the teeth of Section 6 of the CGST Act, we are of the considered opinion that the two grounds raised by the State Authorities would not be sustainable. Firstly, mere not uploading of the order passed by the Central Authorities does not by itself empowers the State agencies to again initiate the proceedings in which the Central Authority i.e., respondent No.4 has already initiated and passed an Order-in-Original. As regards the second ground raised by the learned State counsel that lack of proper and timely intimation by the petitioner, a correspondence made by the petitioner would show that the petitioner has in fact intimated the respondent authorities in this regard time and again. Moreover, from the pleadings itself, it reflects that the Order-in-Original passed by respondent No.4, dated 31.10.2023 was endorsed to the State agencies which is sufficient to draw an inference that the State Authorities were aware or atleast were informed about the proceedings drawn by respondent No.4.
9. In view thereof, we are of the considered opinion that the impugned Demand Order dated 30.12.2023 for the tax period July. 2017 to March, 2018 would not be sustainable and the same deserves to be and is accordingly set aside/quashed.
10. The Writ Petition to the aforesaid extent stands allowed.
Consequently, miscellaneous petitions pending, if any, shall stand closed. No order as to costs.
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