Case Law Details
RR Metal Industries Vs Union of India (Telangana High Court)
GST: The Hon’ble Telangana HC has stayed a composite SCN issued under Sections 74, 74A, and 130 of the CGST Act, questioning the legality of such consolidated proceedings and granted interim relief
The Petitioner is a manufacturer of metal products. DGGI visited its premises and seized certain stocks. It was alleged that it had received invoices without goods. It was issued a show cause notice proposing demand of GST for financial years 2022-2023 to 2025-2026 under Section 74 and 74A of the CGST Act; along with a proposal to confiscate the goods under Section 130 of the Act. The show cause notice was challenged in a writ petition.
The Hon’ble Telangana High Court stayed the show cause notice. It held: (i) prima facie a consolidated notice issued under Section 74; Section 74A and Section 130 cannot be issued; (ii) It notes that the Delhi High Court is re-examining its view taken in Ambika Traders; post direction from Supreme Court in M/s. Aparna Collection; (iii) challenge to notice as it is contrary to law and facts; hence; directs the Department to file affidavit in reply on the said issues.
Argued by Adv. Bharat Raichandani a/w Adv. Venkata Prasad.
FULL TEXT OF THE JUDGMENT/ORDER OF TELANGANA HIGH COURT
For the reasons stated in the supporting affidavit, this interlocutory application seeking to dispense with filing of certified copy of the impugned notice is allowed Learned counsel Sri Bharat Raichandani, representing M/s. P.V.Prasad Associates, appears for the petitioner.
Sri Dominic Fernandes, learned Senior Standing Counsel for Central Board of Indirect Taxes and Customs CBIC), appears for respondents No.2 to 6.
The impugned show cause notice dated 06.12.2025 combines tax periods 2022-23 to 2025-26 both under (CBIC), appears for respondents No.2 to 6. The impugned show cause notice dated 06.12.2025 combines tax periods 2022-23 to 2025-26 both under Section 74 and 74A of the Central Goods and Services Tax Act, 2017/Telangana Goods and Services Tax Act, 2017 (hereinafter referred to as, “the Act”), including the proposal to confiscate the goods under Section 130 of the Act.
Learned counsel for the petitioner submits that the proceedings for different years and that too covered under different provisions i.e., Section 74 and 74A of the Act with Section 130 of the Act are not legally sustainable, as each of the periods have different cause of action and the ingredients of Section 74 and Section 74A of the Act are also different.
The timelines for passing the order from the date of issuance of the notice are also different.
It is further submitted that, whereas Section 74 of the Act prescribes initiation of proceedings for nonpayment of tax or short payment or erroneously refunded or for wrongfully availing input tax credit by reason of fraud or any wilful misstatement or suppression of facts, Section 74A of the Act is not based on any fraudulent suppression or misrepresentation of facts to evade tax.
It is submitted that, moreover, the view taken by the Delhi High Court in the case of Ambika Traders Through Proprietor Gaurav Gupta v. Additional Commissioner, Adjudication DGGSTI, CGST Delhi North (2025: DHC: 6181-DB : [2025] 177 taxmann.com 134 (Delhi)) is under reconsideration in view of the observation made by the Apex Court in W.P (C).No.890 of 2025 in the case of M/s. Aparna Collection v. Union of India vide order dated 07.10.2025.
Learned counsel for the petitioner submits that composite proceedings for different years attracting different provisions with different ingredients are not tenable in law and on facts. Therefore, the petitioner has approached this court against the show cause notice itself Learned Senior Standing Counsel for CBIC is allowed two weeks time to seek instructions and file the counter affidavit.
Learned Senior Standing Counsel for CBIC is allowed two weeks time to seek instructions and file the counter affidavit. Reply affidavit/rejoinder affidavit, if any, may be filed within one week therefrom.
Let the matter appear on 22.04.2026.
In the meantime, the impugned show cause notice remain stayed.
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