Telangana HC Permits Taxpayer to Pursue GST Appeal Against Assessment Order

United Engineering Co. Vs Superintendent of Central Tax (Telangana High Court)

Telangana High Court Permits Taxpayer to Pursue GST Appeal Against Assessment Order After Claiming Knowledge Through Recovery Proceedings  

The Telangana High Court disposed of a writ petition challenging a GST assessment order by granting liberty to the taxpayer to avail the statutory appellate remedy. The Court directed that if the appeal is filed within two weeks along with the prescribed pre-deposit, the appellate authority may consider the appeal in accordance with law while taking into account that the petitioner had been pursuing a writ remedy before the High Court.

Introduction

In M/s. United Engineering Co. v. Superintendent of Central Tax & Others, the petitioner challenged an assessment order passed under Section 73 of the Central Goods and Services Tax Act, 2017 for the tax period 2020-21.

The petitioner claimed that it became aware of the tax liability only after receiving communications from the department demanding payment and upon initiation of bank attachment proceedings through Form GST DRC-13.

Facts of the Case

The dispute arose from:

• Order-in-Original dated 25.02.2025 passed under Section 73 of the CGST Act, 2017.
• The order imposed GST demand along with interest and penalty for the tax period 2020-21.
• The petitioner contended that it became aware of the liability only when:
  • Departmental authorities contacted it demanding payment; and
  • Recovery proceedings were initiated through Form GST DRC-13 (bank attachment proceedings).

Aggrieved by the assessment and recovery action, the petitioner approached the Telangana High Court under Article 226 of the Constitution.

Petitioner’s Contentions

The petitioner submitted that:

• Knowledge of the assessment order was gained only after recovery proceedings commenced.
• It intended to challenge the Order-in-Original before the statutory appellate authority.
• Some delay may have occurred in filing the appeal.
• Therefore, the appellate authority should be directed to consider the appeal sympathetically while examining the issue of limitation.

Revenue’s Position

The Revenue contended that:

• The petitioner had an effective statutory remedy of appeal against the Order-in-Original.
• All factual and legal grounds could be raised before the appellate authority.
• The appeal mechanism under the CGST Act was the appropriate forum for adjudication of the dispute.

Court’s Observations

The High Court noted that:

• The petitioner itself sought liberty to avail the statutory appellate remedy.
• Questions raised in the writ petition could appropriately be examined by the appellate authority.
• Since the petitioner intended to pursue the appeal, the Court considered it unnecessary to examine the merits of the assessment order.

The Bench therefore refrained from expressing any opinion on the merits of the controversy.

Final Decision

The Telangana High Court:

• Granted liberty to the petitioner to file a statutory appeal against the Order-in-Original.
• Directed that the appeal be filed within two weeks along with the prescribed statutory pre-deposit.
• Observed that the appellate authority should consider the appeal in accordance with law.
• Directed that while considering the matter, the appellate authority may take into account that the petitioner had been pursuing a writ remedy before the High Court.
• Clarified that the petitioner would be free to raise all factual and legal grounds before the appellate authority.
• Disposed of the writ petition without costs.

Key Takeaways

1. High Courts Continue to Encourage Exhaustion of Statutory Remedies

Where an effective appellate mechanism exists under the GST law, High Courts generally direct taxpayers to pursue the statutory remedy rather than adjudicate the dispute in writ proceedings.

2. Pursuit of Writ Remedy May Be Relevant for Delay Consideration

The Court specifically observed that the appellate authority may take into account the fact that the taxpayer had been bona fide pursuing a writ remedy while considering the appeal.

3. Recovery Proceedings Often Trigger Discovery of Assessment Orders

The case reflects a recurring GST litigation issue where taxpayers claim to have become aware of assessment orders only after initiation of recovery measures such as bank attachment through Form GST DRC-13.

4. All Legal and Factual Grounds Remain Open Before Appellate Authority

By refraining from commenting on merits, the Court preserved the taxpayer’s right to raise all available grounds before the appellate forum.

Conclusion

In M/s. United Engineering Co. v. Superintendent of Central Tax & Others, the Telangana High Court declined to examine the merits of a GST assessment order and instead allowed the taxpayer to pursue the statutory appellate remedy. The ruling reiterates the principle that GST disputes should ordinarily be resolved through the appellate framework established under the CGST Act, while also recognizing that the pendency of writ proceedings may be a relevant factor when appellate authorities consider questions of delay.

FULL TEXT OF THE JUDGMENT/ORDER OF TELANGANA HIGH COURT

Learned counsel Sri B.Srinivas, representing learned counsel Sri M.V.L.Narasimha Rao, appears for the petitioner.

Sri Dominic Fernandes, learned Senior Standing Counsel for Central Board of Indirect Taxes and Customs, appears for respondent No.1.

2. The writ petition has been preferred against the order-in-original dated 25.02.2025 passed under Section 73 of the Central Goods and Services Tax Act, 2017, for the tax period 2020-2021 imposing the tax, penalty and interest.

3. The petitioner has approached this Court alleging that it has come to know about the liability only upon receiving call from the authorities demanding the tax and in view of the bank attachment in Form GST DRC-13.

4. However, after some arguments, learned counsel for the petitioner seeks liberty to the petitioner to prefer an appeal against the order-in-original. He submits that some delay might have been occurred in approaching the appellate authority and therefore, he may be directed to consider it sympathetically.

5. Learned Senior Standing Counsel for CBIC submits that the petitioner was at liberty to prefer an appeal against the order-in-original taking all the grounds as are available in law and on facts before the appellate authority in respect of the subject tax period.

6. However, upon hearing the learned counsel for the parties, since the petitioner seeks liberty to prefer an appeal, we do not wish to comment on the merits of the contentions raised by the parties.

7. If the petitioner prefers an appeal within a period of two weeks with statutory pre-deposit, the learned appellate authority would consider it in accordance with law also keeping into consideration that it has been pursuing the writ remedy before this Court in the meantime as well. The petitioner will be at liberty to take all the grounds in law and on facts before the appellate authority.

8. The writ petition is accordingly disposed of with the aforesaid liberty. However, there shall be no order as to costs.

Miscellaneous applications pending, if any, shall stand closed.