Telangana HC Sets Aside GST Assessment Over Multiple SCNs for Same Period

Badarla Platinum Enterprises LLP Vs Assistant Commissioner of State Tax (Telangana High Court)

Telangana High Court Sets Aside GST Assessment Due to Multiple Show Cause Notices for Same Tax Period 

The Telangana High Court held that where multiple show cause notices are issued for the same tax period without adjudicating the earlier notice, the assessing authority must first rectify the procedural irregularity under Section 161 of the GST Act. The Court set aside the ex parte assessment order and remanded the matter for fresh adjudication after granting the taxpayer an opportunity to file a reply and be heard.

Introduction

In Badarla Platinum Enterprises LLP vs Assistant Commissioner of State Tax & Others, the Telangana High Court examined the legality of GST proceedings where the State Tax Department issued two separate show cause notices for the same tax period (FY 2019-20).

The Court found that the first notice had never been adjudicated despite the taxpayer filing a reply, while the second notice culminated in an ex parte assessment order under Section 73 of the GST Act. Considering this procedural irregularity, the Court intervened and directed the department to rectify the earlier proceedings and conduct a fresh assessment.

Background of the Case

The petitioner received:

• First Show Cause Notice dated 13.02.2021 for FY 2019-20.
• Second Show Cause Notice dated 31.05.2024 for the same tax period.
• Ex parte Order-in-Original dated 28.08.2024 imposing tax, interest, and penalty under Section 73 of the GST Act.

The petitioner contended that:

• A reply had already been filed to the first show cause notice.
• The first notice was never adjudicated.
• Issuing a second notice for the same period without concluding the earlier proceedings was legally unsustainable.
• The ex parte assessment violated principles of fairness and due process.

Key Legal Issue

The principal issue before the Court was:

Whether the GST department can issue and adjudicate a second show cause notice for the same tax period when the first notice remains pending without adjudication?

Petitioner’s Arguments

The petitioner submitted that:

• Two separate show cause notices were issued for the identical tax period.
• The department failed to adjudicate the first notice despite receiving a reply.
• Subsequent proceedings based on the second notice were improper and unlawful.
• The assessment order should be set aside and the matter remanded for fresh consideration.

Department’s Stand

The State Tax Department argued that:

• As per the Standard Operating Procedure (SOP) issued by the Commercial Taxes Department on 14.10.2025, the proper officer could exercise rectification powers under Section 161 of the GST Act.
• The petitioner should have participated in the proceedings arising from the second show cause notice and raised objections at that stage.

Court’s Observations

The Telangana High Court observed that:

• Two show cause notices had indeed been issued for the same tax period.
• The first notice remained unadjudicated despite the petitioner having filed a reply.
• Such procedural irregularity required correction before proceeding further.
• The assessing authority should invoke powers under Section 161 to rectify or withdraw the earlier notice.
• Since the second notice resulted in an ex parte assessment order, the taxpayer deserved an opportunity to submit a reply and participate in fresh proceedings.

The Court emphasized that procedural fairness and proper adjudication must be ensured before any tax liability is finalized.

Final Judgment

The High Court passed the following directions:

• The Order-in-Original dated 28.08.2024 was set aside.
• The matter was remanded to the assessing authority.
• The assessing authority was directed to exercise powers under Section 161 and rectify or withdraw the first show cause notice.
• The petitioner was permitted to file a reply to the second show cause notice within three weeks.
• The assessing authority was directed to grant:
  • Adequate opportunity to file a reply.
  • Personal hearing.
  • Fresh adjudication in accordance with law.
• The writ petition was disposed of without costs.

Author’s Analysis

1. Multiple Show Cause Notices for the Same Period Not Favoured

The judgment reinforces that parallel or overlapping proceedings for the same tax period can create procedural uncertainty and prejudice taxpayers. Authorities must ensure that earlier proceedings are properly concluded before initiating fresh action.

2. Section 161 Emerging as a Corrective Mechanism

The Court specifically endorsed the use of Section 161 (Rectification of Errors) to address procedural mistakes such as duplicate or overlapping show cause notices. This demonstrates the expanding practical importance of rectification powers in GST administration.

3. Ex Parte Orders Face Greater Judicial Scrutiny

Where taxpayers are denied a meaningful opportunity to respond due to procedural defects, courts are more willing to set aside ex parte orders and restore the matter for fresh adjudication.

4. Natural Justice Remains Fundamental

The Court ensured that the taxpayer receives:

• An opportunity to submit a detailed reply.
• Personal hearing.
• Fresh reasoned adjudication.

This highlights the judiciary’s continued emphasis on adherence to principles of natural justice in GST proceedings.

5. Guidance for Tax Authorities

The ruling serves as a reminder that assessing officers should avoid duplicative proceedings and must carefully use statutory correction mechanisms before finalizing assessments.

Conclusion

In Badarla Platinum Enterprises LLP vs Assistant Commissioner of State Tax, the Telangana High Court held that where multiple show cause notices are issued for the same tax period without adjudicating the earlier notice, the department must first rectify the procedural defect under Section 161 of the GST Act. The Court consequently set aside the ex parte assessment order and remanded the matter for fresh adjudication after granting the taxpayer a fair opportunity of hearing.

The decision underscores the importance of procedural discipline, proper use of rectification powers, and strict adherence to principles of natural justice in GST assessments.

FULL TEXT OF THE JUDGMENT/ORDER OF TELANGANA HIGH COURT

Heard Mr. Nishanth Rao.K.N., learned counsel for the petitioner and Mr. Swaroop Oorilla, learned Special Government Pleader for State Tax appearing for the respondents.

2. Petitioner was faced with two show causes notices dated 13.02.2021 and 31.05.2024, for the same tax period i.e., 2019-20. The first show cause notice did not lead to any adjudication, but subsequent to the second show cause notice, petitioner has been imposed the liability of tax, interest and penalty under Section 73 of the Telangana Goods and Services Tax Act, 2017 (for short ‘the Act’), by the impugned Order-in-Original dated 28-08-2024, passed in an ex parte manner. Being aggrieved, the petitioner has approached this Court.

3. Learned counsel for the petitioner submits that multiple show cause notices for the same tax period by the State Tax Authority is not proper in the eye of law. Without adjudication on the first show cause notice to which the petitioner submitted reply, the subsequent proceedings imposing liability upon the petitioner are unwarranted. Therefore, this Court may remand the matter to the proper officer for passing a fresh assessment order after giving an opportunity to the petitioner.

4. Learned Senior Standing Counsel for CBIC submits that as per the Standard Operating Procedure (SOP) contained in Circular dated 14.10.2025, issued by the Commercial Tax Department, Government of Telangana, the proper officer can exercise the power of rectification under Section 161 of the Act by recalling the first show cause notice. He, however, submits that the petitioner ought to have appeared in the proceedings on the second show cause notice dated 31.05.2024 and filed his reply taking that plea, which he has failed to do.

5. Be that as it may, upon hearing learned counsel for the parties, since the case relates to issuance of multiple show cause notices for the same tax period by the same officer without adjudication on the first show cause notice despite filing of reply by the petitioner, we are of the view that the assessing officer should exercise powers under Section 161 of the Act and rectify or withdraw the first show cause notice. Since the second show cause notice for the same tax period ended up in an adjudication order ex parte, we are of the view that petitioner, in the aforesaid peculiar facts and circumstances, should be allowed an opportunity to file reply, upon consideration of which, the assessing officer shall proceed to pass a fresh assessment order on the charges raised in the subsequent show cause notice dated 31.05.2024.

6. In that view of the matter, the impugned Order-in-Original dated 28.08.2024, is set aside.

7. The matter is remanded to the assessing authority to pass a fresh assessment order, after giving due opportunity of filing reply and personal hearing to the petitioner.

8. Petitioner shall file his reply within a period of three weeks from today.

9. The Writ Petition is, accordingly, disposed of. No costs. As a sequel, miscellaneous petitions, pending if any, stand closed.