Background. Max Ventures and Industries Limited merged into Max Estates Limited pursuant to an NCLT order dated 21.07.2023. An application for surrender of registration was filed on 02.11.2023 and the registration was suspended with effect from 10.10.2023. Three orders under Section 73(9) for FY 2017-18, 2018-19 and 2019-20 were nonetheless passed in the name of the merged-out company.Observations of the Court. It was undisputed that before the three assessment orders were passed, the transferor company stood merged with the petitioner, so the orders were passed against a non-existent company. The Court held that the conclusion of the Supreme Court in Maruti Suzuki India Ltd. — that issuance of notice to a non-existent entity is fundamentally at odds with the principle that the amalgamating entity ceases to exist upon an approved scheme — applies equally outside the income-tax context.The revenue’s reliance on Section 87 to contend that proceedings may continue against the transferor company despite the merger was rejected, the Court following the Delhi High Court in HCL Infosystems Ltd., which had taken note of Section 87 and held that the provision does not enable continuation of proceedings against a non-existent entity.Final verdict. The writ petition was allowed and all three orders dated 29.11.2023, 27.04.2024 and 26.08.2024 under Section 73(9) were quashed and set aside, with liberty to the respondents to pursue proceedings against the appropriate entity as permissible in law.
Max Estates Limited v. Union of India and Another 05-03-2025
Background. Max Ventures and Industries Limited merged into Max Estates Limited pursuant to an NCLT order dated 21.07.2023. An application for surrender of registration was filed on 02.11.2023 and the registration was suspended with effect from 10.10.2023. Three orders under Section 73(9) for FY 2017-18, 2018-19 and 2019-20 were nonetheless passed in the name of the merged-out company.Observations of the Court. It was undisputed that before the three assessment orders were passed, the transferor company stood merged with the petitioner, so the orders were passed against a non-existent company. The Court held that the conclusion of the Supreme Court in Maruti Suzuki India Ltd. — that issuance of notice to a non-existent entity is fundamentally at odds with the principle that the amalgamating entity ceases to exist upon an approved scheme — applies equally outside the income-tax context.The revenue’s reliance on Section 87 to contend that proceedings may continue against the transferor company despite the merger was rejected, the Court following the Delhi High Court in HCL Infosystems Ltd., which had taken note of Section 87 and held that the provision does not enable continuation of proceedings against a non-existent entity.Final verdict. The writ petition was allowed and all three orders dated 29.11.2023, 27.04.2024 and 26.08.2024 under Section 73(9) were quashed and set aside, with liberty to the respondents to pursue proceedings against the appropriate entity as permissible in law.
Facts :The petitioner challenged an assessment order dated 31.10.2023 passed under Section 73(9) of the GST Act raising tax, interest and penalty demand. It contended that no show cause notice was effectively communicated, as notices were uploaded on the GST portal under the heading “additional notices and orders” instead of “notices and orders”. Due to this, the petitioner remained unaware and could not file any reply. The petitioner relied on portal screenshots to demonstrate improper placement of notices.Court Decision:The Court held that the petitioner had made out a case of improper service of notice. It observed that although Section 169 permits service through the common portal, the manner of uploading must ensure that notices are effectively communicated. Since the respondents failed to establish that notices were properly placed under the correct heading and the petitioner’s claim remained unrebutted, the impugned assessment order and demand were set aside. The matter was remanded with direction to allow the petitioner to file reply and thereafter pass a fresh order after hearing.Cases Referred:Anhad Impex v. Assistant Commissioner, Ward 16Ola Fleet Technologies Pvt. Ltd. v. State of U.P.Sudarshan Beopar Company Limited v. Union of India
Lord Vishnu Construction Pvt. Ltd. v. Union of India & Ors. 03-03-2025
Facts :The petitioner challenged an assessment order dated 31.10.2023 passed under Section 73(9) of the GST Act raising tax, interest and penalty demand. It contended that no show cause notice was effectively communicated, as notices were uploaded on the GST portal under the heading “additional notices and orders” instead of “notices and orders”. Due to this, the petitioner remained unaware and could not file any reply. The petitioner relied on portal screenshots to demonstrate improper placement of notices.Court Decision:The Court held that the petitioner had made out a case of improper service of notice. It observed that although Section 169 permits service through the common portal, the manner of uploading must ensure that notices are effectively communicated. Since the respondents failed to establish that notices were properly placed under the correct heading and the petitioner’s claim remained unrebutted, the impugned assessment order and demand were set aside. The matter was remanded with direction to allow the petitioner to file reply and thereafter pass a fresh order after hearing.Cases Referred:Anhad Impex v. Assistant Commissioner, Ward 16Ola Fleet Technologies Pvt. Ltd. v. State of U.P.Sudarshan Beopar Company Limited v. Union of India
Facts of the CaseThe present batch of writ petitions and criminal appeals raised a common question regarding the legality and scope of arrest powers exercised by officers under the Customs Act, 1962 and the GST Act, 2017. The controversy stemmed from the three-Judge Bench decision in Om Prakash v. Union of India (2011), which had held that offences under the Customs Act and Central Excise Act were non-cognizable and bailable, and that arrest could not be made without a warrant from the Magistrate.After that decision, Parliament amended the Customs Act in 2012, 2013 and 2019. Certain specified offences were declared cognizable, and some were further declared non-bailable. Similar legislative structure was adopted in the GST Act. Despite these amendments, challenges continued to be raised questioning the power of customs officers to arrest without warrant, the applicability of provisions of the Code of Criminal Procedure, and whether customs officers were to be treated as “police officers.”The matters reached the Supreme Court to determine:Whether the ratio in Om Prakash continued to apply after statutory amendments.Whether customs officers are police officers.To what extent provisions of the Code of Criminal Procedure apply to arrests under the Customs Act.What safeguards must be observed while exercising the power of arrest.Court’s Observations and DecisionThe Court declined to reopen the correctness of Om Prakash, noting that the legislature had consciously amended the Customs Act after that judgment. The amendments carved out specific offences as cognizable and certain serious offences as non-bailable. Therefore, the statutory scheme now governs the classification of offences.The Court held:Customs officers are not police officers, as consistently held in earlier Constitution Bench decisions.However, even though they are not police officers, procedural safeguards under the Code of Criminal Procedure apply unless expressly excluded by the special statute.Sections 4 and 5 of the Code make it clear that provisions of the Code apply to offences under special laws unless a contrary procedure is prescribed.The Court clarified the legal position post-amendment:Offences specified under Section 104(4) of the Customs Act are cognizable.Certain offences under Section 104(6) are non-bailable.All other offences are non-cognizable and bailable.The Court emphasized that the power of arrest is a drastic power affecting personal liberty and must be exercised strictly in accordance with statutory safeguards. It applied principles earlier laid down in cases dealing with arrest under special statutes, including those under the PMLA.The Court held that the following safeguards are mandatory:The officer must have “material” and must form “reasons to believe” before arrest.Grounds of arrest must be informed to the arrestee.Proper records and diary must be maintained.Safeguards under Sections 41B, 41D, 50A and 55A of the Code apply.The arrestee has a right to meet an advocate during interrogation, though not throughout.Magistrates must ensure compliance with procedural safeguards at the time of production.The Court further held that judicial review of arrest is permissible. Courts can examine whether the statutory preconditions for arrest were satisfied.Case ReferredOm Prakash and Another v. Union of India and Another, (2011) 14 SCC 1, Supreme Court of India.Directorate of Enforcement v. Deepak Mahajan, (1994) 3 SCC 440, Supreme Court of India.A.R. Antulay v. Ramdas Sriniwas Nayak, (1984) 2 SCC 500, Supreme Court of India.State of Punjab v. Barkat Ram, (1962) 3 SCR 338, Supreme Court of India.Ramesh Chandra Mehta v. State of West Bengal, (1969) 2 SCR 461, Supreme Court of India (Constitution Bench).Illias v. Collector of Customs, (1969) 2 SCR 613, Supreme Court of India (Constitution Bench).Tofan Singh v. State of Tamil Nadu, (2021) 4 SCC 1, Supreme Court of India.Union of India v. Ashok Kumar Sharma, (2021) 12 SCC 674, Supreme Court of India.D.K. Basu v. State of West Bengal, (1997) 1 SCC 416, Supreme Court of India.Senior Intelligence Officer, DRI v. Jugal Kishore Samra, (2011) 12 SCC 362, Supreme Court of India.Arvind Kejriwal v. Directorate of Enforcement, (2025) 2 SCC 248, Supreme Court of India.Pankaj Bansal v. Union of India, 2023 SCC OnLine SC 1244, Supreme Court of India.Prabir Purkayastha v. State (NCT of Delhi), (2024) 7 SCC 576, Supreme Court of India.Vijay Madanlal Choudhary v. Union of India, 2022 SCC OnLine SC 929, Supreme Court of India.
Facts of the CaseThe present batch of writ petitions and criminal appeals raised a common question regarding the legality and scope of arrest powers exercised by officers under the Customs Act, 1962 and the GST Act, 2017. The controversy stemmed from the three-Judge Bench decision in Om Prakash v. Union of India (2011), which had held that offences under the Customs Act and Central Excise Act were non-cognizable and bailable, and that arrest could not be made without a warrant from the Magistrate.After that decision, Parliament amended the Customs Act in 2012, 2013 and 2019. Certain specified offences were declared cognizable, and some were further declared non-bailable. Similar legislative structure was adopted in the GST Act. Despite these amendments, challenges continued to be raised questioning the power of customs officers to arrest without warrant, the applicability of provisions of the Code of Criminal Procedure, and whether customs officers were to be treated as “police officers.”The matters reached the Supreme Court to determine:Whether the ratio in Om Prakash continued to apply after statutory amendments.Whether customs officers are police officers.To what extent provisions of the Code of Criminal Procedure apply to arrests under the Customs Act.What safeguards must be observed while exercising the power of arrest.Court’s Observations and DecisionThe Court declined to reopen the correctness of Om Prakash, noting that the legislature had consciously amended the Customs Act after that judgment. The amendments carved out specific offences as cognizable and certain serious offences as non-bailable. Therefore, the statutory scheme now governs the classification of offences.The Court held:Customs officers are not police officers, as consistently held in earlier Constitution Bench decisions.However, even though they are not police officers, procedural safeguards under the Code of Criminal Procedure apply unless expressly excluded by the special statute.Sections 4 and 5 of the Code make it clear that provisions of the Code apply to offences under special laws unless a contrary procedure is prescribed.The Court clarified the legal position post-amendment:Offences specified under Section 104(4) of the Customs Act are cognizable.Certain offences under Section 104(6) are non-bailable.All other offences are non-cognizable and bailable.The Court emphasized that the power of arrest is a drastic power affecting personal liberty and must be exercised strictly in accordance with statutory safeguards. It applied principles earlier laid down in cases dealing with arrest under special statutes, including those under the PMLA.The Court held that the following safeguards are mandatory:The officer must have “material” and must form “reasons to believe” before arrest.Grounds of arrest must be informed to the arrestee.Proper records and diary must be maintained.Safeguards under Sections 41B, 41D, 50A and 55A of the Code apply.The arrestee has a right to meet an advocate during interrogation, though not throughout.Magistrates must ensure compliance with procedural safeguards at the time of production.The Court further held that judicial review of arrest is permissible. Courts can examine whether the statutory preconditions for arrest were satisfied.Case ReferredOm Prakash and Another v. Union of India and Another, (2011) 14 SCC 1, Supreme Court of India.Directorate of Enforcement v. Deepak Mahajan, (1994) 3 SCC 440, Supreme Court of India.A.R. Antulay v. Ramdas Sriniwas Nayak, (1984) 2 SCC 500, Supreme Court of India.State of Punjab v. Barkat Ram, (1962) 3 SCR 338, Supreme Court of India.Ramesh Chandra Mehta v. State of West Bengal, (1969) 2 SCR 461, Supreme Court of India (Constitution Bench).Illias v. Collector of Customs, (1969) 2 SCR 613, Supreme Court of India (Constitution Bench).Tofan Singh v. State of Tamil Nadu, (2021) 4 SCC 1, Supreme Court of India.Union of India v. Ashok Kumar Sharma, (2021) 12 SCC 674, Supreme Court of India.D.K. Basu v. State of West Bengal, (1997) 1 SCC 416, Supreme Court of India.Senior Intelligence Officer, DRI v. Jugal Kishore Samra, (2011) 12 SCC 362, Supreme Court of India.Arvind Kejriwal v. Directorate of Enforcement, (2025) 2 SCC 248, Supreme Court of India.Pankaj Bansal v. Union of India, 2023 SCC OnLine SC 1244, Supreme Court of India.Prabir Purkayastha v. State (NCT of Delhi), (2024) 7 SCC 576, Supreme Court of India.Vijay Madanlal Choudhary v. Union of India, 2022 SCC OnLine SC 929, Supreme Court of India.
Facts:The petitioner challenged Order-in-Original No.04/2025-GST ADC dated 06.01.2025 and the consequential rectification order dated 30.04.2025 passed for the period July 2017 to March 2023. The petitioner contended that the department issued a single show cause notice and passed a single order covering multiple financial years, which is contrary to the scheme of the GST Act.Court Decision:The Court held that under the GST Act, show cause notices must be issued based on the “tax period”. Where the assessment is based on annual returns, the relevant tax period corresponds to the respective financial year.The Court relied on its earlier decision dated 21.07.2025 in a batch of cases holding that show cause notices cannot be clubbed for more than one financial year. Since the impugned order covered the period from July 2017 to March 2023 through a single proceeding, the action was held to be without jurisdiction.Accordingly, the Court quashed the assessment order dated 06.01.2025 and the rectification order dated 30.04.2025 and granted liberty to the department to initiate separate proceedings for each financial year in accordance with law.Cases Referred by Court: W.P. Nos.29716 of 2024 etc. batch (Madras High Court, Order dated 21.07.2025)
Instakart Services Private Limited vs The Additional Commissioner, Chennai South Commissionerate 22-02-2025
Facts:The petitioner challenged Order-in-Original No.04/2025-GST ADC dated 06.01.2025 and the consequential rectification order dated 30.04.2025 passed for the period July 2017 to March 2023. The petitioner contended that the department issued a single show cause notice and passed a single order covering multiple financial years, which is contrary to the scheme of the GST Act.Court Decision:The Court held that under the GST Act, show cause notices must be issued based on the “tax period”. Where the assessment is based on annual returns, the relevant tax period corresponds to the respective financial year.The Court relied on its earlier decision dated 21.07.2025 in a batch of cases holding that show cause notices cannot be clubbed for more than one financial year. Since the impugned order covered the period from July 2017 to March 2023 through a single proceeding, the action was held to be without jurisdiction.Accordingly, the Court quashed the assessment order dated 06.01.2025 and the rectification order dated 30.04.2025 and granted liberty to the department to initiate separate proceedings for each financial year in accordance with law.Cases Referred by Court: W.P. Nos.29716 of 2024 etc. batch (Madras High Court, Order dated 21.07.2025)
Facts:The respondent-assessee challenged a show cause notice dated 29.07.2024 issued under Section 74 of the CGST Act demanding tax, interest and penalty for the financial years 2017-18 to 2023-24 through a single consolidated notice. The Single Judge permitted the authority to pass an order for FY 2017-18 within limitation and directed separate adjudication orders for the remaining years. The department filed a writ appeal challenging that direction.Court Decision:The Division Bench held that under Section 74 of the CGST Act the determination of tax is linked to the financial year to which the alleged tax evasion relates, and the limitation for passing adjudication orders is computed separately for each financial year from the due date of filing the annual return.The Court held that although the statute does not expressly prohibit issuance of a consolidated show cause notice, the proper officer should ideally issue separate notices for different financial years because the limitation for adjudication differs for each year. A consolidated notice covering several financial years could prejudice the assessee by curtailing the effective time available for defence and evidence.Finding no error in the reasoning of the Single Judge, the Court dismissed the writ appeal and upheld the direction permitting separate adjudication orders for each financial year after granting opportunity of hearing.Cases Referred by Court: CIT v. Simon Carves Ltd., (1976) 4 SCC 435
Joint Commissioner (Intelligence & Enforcement) & Anr. vs Lakshmi Mobile Accessories 05-02-2025
Facts:The respondent-assessee challenged a show cause notice dated 29.07.2024 issued under Section 74 of the CGST Act demanding tax, interest and penalty for the financial years 2017-18 to 2023-24 through a single consolidated notice. The Single Judge permitted the authority to pass an order for FY 2017-18 within limitation and directed separate adjudication orders for the remaining years. The department filed a writ appeal challenging that direction.Court Decision:The Division Bench held that under Section 74 of the CGST Act the determination of tax is linked to the financial year to which the alleged tax evasion relates, and the limitation for passing adjudication orders is computed separately for each financial year from the due date of filing the annual return.The Court held that although the statute does not expressly prohibit issuance of a consolidated show cause notice, the proper officer should ideally issue separate notices for different financial years because the limitation for adjudication differs for each year. A consolidated notice covering several financial years could prejudice the assessee by curtailing the effective time available for defence and evidence.Finding no error in the reasoning of the Single Judge, the Court dismissed the writ appeal and upheld the direction permitting separate adjudication orders for each financial year after granting opportunity of hearing.Cases Referred by Court: CIT v. Simon Carves Ltd., (1976) 4 SCC 435
Case Facts:The petitioner challenged an order dated 28 January 2025 passed under Section 83 of the MGST Act attaching its bank account. The department alleged wrongful availment of Input Tax Credit (ITC) under Section 17(5)(d) and initiated proceedings under Section 67. The petitioner contended that the issue was purely legal and relied on judicial precedent and CBIC guidelines. It was argued that the attachment severely impacted business operations and lacked proper justification. Court Decision:The Court held that the power under Section 83 is drastic and must be exercised strictly in accordance with statutory conditions. It observed that no material was placed on record to show that the petitioner was likely to defeat the demand or that attachment was necessary to protect revenue. The impugned order was found to be based on insufficient reasoning and amounted to a colourable exercise of power. Upon instructions, the State agreed to withdraw the attachment order. The Court set aside the order and directed immediate operation of the bank account. Cases Referred by Court:Radha Krishan Industries vs State of Himachal PradeshSafari Retreats (Supreme Court judgment referred in context of ITC eligibility)
Goisu Realty Pvt. Ltd. vs State of Maharashtra & Ors. 31-01-2025
Case Facts:The petitioner challenged an order dated 28 January 2025 passed under Section 83 of the MGST Act attaching its bank account. The department alleged wrongful availment of Input Tax Credit (ITC) under Section 17(5)(d) and initiated proceedings under Section 67. The petitioner contended that the issue was purely legal and relied on judicial precedent and CBIC guidelines. It was argued that the attachment severely impacted business operations and lacked proper justification. Court Decision:The Court held that the power under Section 83 is drastic and must be exercised strictly in accordance with statutory conditions. It observed that no material was placed on record to show that the petitioner was likely to defeat the demand or that attachment was necessary to protect revenue. The impugned order was found to be based on insufficient reasoning and amounted to a colourable exercise of power. Upon instructions, the State agreed to withdraw the attachment order. The Court set aside the order and directed immediate operation of the bank account. Cases Referred by Court:Radha Krishan Industries vs State of Himachal PradeshSafari Retreats (Supreme Court judgment referred in context of ITC eligibility)
Facts:The petitioner challenged the show cause notice dated 29.07.2024 issued under Section 74 of the CGST Act proposing tax, interest and penalty for the financial years 2018-19 to 2023-24. The petitioner apprehended that the authorities would pass a composite adjudication order covering multiple financial years and sought direction for passing separate orders and granting opportunity for cross-examination.Court Decision:The Court held that at the stage of show cause notice there was no material to assume that the authorities would adopt a procedure contrary to law or deny opportunity of hearing. Therefore, interference with the show cause notice was not warranted.However, considering the limitation period for passing order for the financial year 2017-18, the Court permitted the authority to pass an order for that year within the prescribed limitation after granting opportunity of hearing. For the subsequent financial years, the Court observed that separate adjudication orders ought to be issued for each year even if the show cause notice is composite, and directed the authority to pass separate orders after granting reasonable opportunity of hearing. The writ petition was disposed of with these directions.Cases Referred by Court:· W.P.(C) No.35156 of 2024 (Kerala High Court)
Lakshmi Mobile Accessories vs Joint Commissioner (Intelligence & Enforcement) & Anr. 28-01-2025
Facts:The petitioner challenged the show cause notice dated 29.07.2024 issued under Section 74 of the CGST Act proposing tax, interest and penalty for the financial years 2018-19 to 2023-24. The petitioner apprehended that the authorities would pass a composite adjudication order covering multiple financial years and sought direction for passing separate orders and granting opportunity for cross-examination.Court Decision:The Court held that at the stage of show cause notice there was no material to assume that the authorities would adopt a procedure contrary to law or deny opportunity of hearing. Therefore, interference with the show cause notice was not warranted.However, considering the limitation period for passing order for the financial year 2017-18, the Court permitted the authority to pass an order for that year within the prescribed limitation after granting opportunity of hearing. For the subsequent financial years, the Court observed that separate adjudication orders ought to be issued for each year even if the show cause notice is composite, and directed the authority to pass separate orders after granting reasonable opportunity of hearing. The writ petition was disposed of with these directions.Cases Referred by Court:· W.P.(C) No.35156 of 2024 (Kerala High Court)
Court DecisionThe Supreme Court dismissed the Special Leave Petitions filed by the Union of India against the judgment of the Bombay High Court.The Court noted that the High Court had quashed the show cause notices seeking recovery of ₹3731 crores from the respondent, holding that:The basic jurisdictional requirements were not attracted for invoking Section 122(1A) and Section 137 of the CGST Act.No principle of vicarious liability could be read into Sections 122 and 137.The respondent was merely an employee and could not be fastened with the liability alleged against the company.The Supreme Court held that it saw no good reason to interfere with the common impugned orders passed by the High Court.However, the Court clarified that the question of law regarding the interpretation of Sections 122(1A) and 137 of the CGST Act was kept open.Accordingly, the Special Leave Petitions were dismissed and pending applications were disposed of. Cases Referred by the CourtShantanu Sanjay Hundekari vs. Union of India & Ors., WPL Nos. 30198/2023, 30199/2023, 30200/2023 & 30241/2023 (Bombay High Court, judgment dated 28 March 2024)
Union of India & Ors. vs. Shantanu Sanjay Hundekari & Anr. Etc. 24-01-2025
Court DecisionThe Supreme Court dismissed the Special Leave Petitions filed by the Union of India against the judgment of the Bombay High Court.The Court noted that the High Court had quashed the show cause notices seeking recovery of ₹3731 crores from the respondent, holding that:The basic jurisdictional requirements were not attracted for invoking Section 122(1A) and Section 137 of the CGST Act.No principle of vicarious liability could be read into Sections 122 and 137.The respondent was merely an employee and could not be fastened with the liability alleged against the company.The Supreme Court held that it saw no good reason to interfere with the common impugned orders passed by the High Court.However, the Court clarified that the question of law regarding the interpretation of Sections 122(1A) and 137 of the CGST Act was kept open.Accordingly, the Special Leave Petitions were dismissed and pending applications were disposed of. Cases Referred by the CourtShantanu Sanjay Hundekari vs. Union of India & Ors., WPL Nos. 30198/2023, 30199/2023, 30200/2023 & 30241/2023 (Bombay High Court, judgment dated 28 March 2024)
Facts :The petitioner challenged assessment orders on the ground that notices and orders were only uploaded on the GST portal without being served through other modes under Section 169 of the Act. It was contended that due to reliance on tax practitioners and lack of awareness, the petitioner did not receive effective notice. The petitioners argued that Section 169 should be interpreted to ensure compliance with principles of natural justice. The Department contended that portal service is valid and sufficient compliance.Court Decision:The Court held that Section 169 must be interpreted to ensure effective service of notice and compliance with natural justice. It ruled that modes under Section 169(1)(a) to (c) are alternative primary modes and must ordinarily be attempted, and only upon failure or impracticability, modes under clauses (d) to (f), including portal upload, can be resorted to. Mere uploading on the portal without attempting other modes is insufficient. The impugned assessment orders were set aside and matters remanded for fresh adjudication after giving opportunity to file objections and be heard.Cases Referred:M. Satyanarayana v. State of KarnatakaSingaravelar Spinning Mills (P) Ltd. v. State of Tamil NaduPandidorai Sethupathi Raja v. Superintendent of Central TaxPee Bee Enterprises v. Assistant CommissionerRam Prasad Sharma v. Chief CommissionerV.N.V. Builders Pvt. Ltd. v. State Tax Officer
Sahulhameed v. The Commercial Tax Officer, Tuticorin-II 06-01-2025
Facts :The petitioner challenged assessment orders on the ground that notices and orders were only uploaded on the GST portal without being served through other modes under Section 169 of the Act. It was contended that due to reliance on tax practitioners and lack of awareness, the petitioner did not receive effective notice. The petitioners argued that Section 169 should be interpreted to ensure compliance with principles of natural justice. The Department contended that portal service is valid and sufficient compliance.Court Decision:The Court held that Section 169 must be interpreted to ensure effective service of notice and compliance with natural justice. It ruled that modes under Section 169(1)(a) to (c) are alternative primary modes and must ordinarily be attempted, and only upon failure or impracticability, modes under clauses (d) to (f), including portal upload, can be resorted to. Mere uploading on the portal without attempting other modes is insufficient. The impugned assessment orders were set aside and matters remanded for fresh adjudication after giving opportunity to file objections and be heard.Cases Referred:M. Satyanarayana v. State of KarnatakaSingaravelar Spinning Mills (P) Ltd. v. State of Tamil NaduPandidorai Sethupathi Raja v. Superintendent of Central TaxPee Bee Enterprises v. Assistant CommissionerRam Prasad Sharma v. Chief CommissionerV.N.V. Builders Pvt. Ltd. v. State Tax Officer
BackgroundGujarat Industrial Development Corporation (GIDC), a nodal agency of the Government of Gujarat, acquires and develops industrial estates and allots plots of land on long-term lease of 99 years to industrial entities, initially by a licensing agreement and subsequently by a registered lease deed, on payment of premium and periodic lease rent. The lease deed permits the lessee to assign leasehold rights to a third party with GIDC's approval. After implementation of GST, the department issued summons and show cause notices to members of the Gujarat Chamber of Commerce and Industry who had assigned their leasehold rights along with buildings constructed thereon on the GIDC plots to third party assignees for lump-sum consideration, demanding GST at 18% by treating such assignment as "supply of service" under the CGST/SGST Act, 2017. The petitioner Chamber made representations contending that such assignment is a transfer of immovable property excluded from GST under Entry 5 of Schedule III, and alternatively, that ITC would be admissible if GST is levied. Since representations were not considered, a batch of 60+ writ petitions were filed, with SCA No. 11345 of 2023 treated as the lead matter.Court Observations (Verbatim)"When such leasehold right is transferred by the lessee-assignor in favour of a third person-assignee by execution of deed of assignment, it would be nothing but transfer of an 'immovable property' in view of the settled legal position to the effect that lease for 99 years or for a long term in consideration of premium paid is as much an alienation as sale or mortgage.""Interest in the immovable property in form of leasehold rights cannot be said to be different than the immovable property itself.""Leasehold rights which are to be considered as sale of land would be out of purview of the provisions of scope of supply as per section 7 of the GST Act.""The scope of 'supply of services' would not include transfer of leasehold rights as supply of service as it would be transfer of 'immovable property' being a benefit arising out of immovable property consisting of land and building.""Clause 5 of Schedule III of the GST Act clearly provides that sale of land cannot be treated as supply of goods or services. Therefore, leasehold rights which are to be considered as sale of land would be out of purview of the provisions of scope of supply as per section 7 of the GST Act.""Under the Service Tax Act, even the development rights which are the benefits arising from land were not liable to tax. Leasehold right is in fact a greater right and interest in land than development rights and the principle under the service tax regime would therefore, continue even to apply under the GST regime as the object of introduction of GST is to subsume the existing taxes.""When the lessee/assignor transfers the land having leasehold rights and building to the assignee, same cannot be considered as supply of service as it would be a transfer of immovable property. Therefore...assignment of leasehold rights equal to the renting of immovable property as per clause 5(b) of the Schedule II would be contrary to such legislative intent.""When the legislature in its wisdom has chosen to exclude the sale of land and building from purview of GST Act, there is no ambiguity that section 7(1)(a) would be applicable to the sale of immovable property and once it is held that assignment of the leasehold rights being the benefit/interest arising out of immovable property would partake the character as such, cannot be covered under the scope of supply of services by any stretch of imagination.""Transfer charges paid by the assignee would be subject to levy of GST but at the same time consideration paid by the assignee to the lessee/assignor would amount to transfer of immovable property which would be out of purview of provision of section 7(1)(a) of the GST Act read with Schedule II and Schedule III thereof."Final VerdictAssignment/sale/transfer of leasehold rights of GIDC-allotted industrial plot along with building by lessee/assignor to third party/assignee for consideration is a transfer of immovable property covered under Clause 5 of Schedule III of the GST Act and not a "supply of service" — hence not liable to GST. All impugned show cause notices and orders/appeals were quashed and set aside. Rule made absolute. Stay of operation of the judgment was also rejected by the Court.
Gujarat Chamber of Commerce & Industry v. Union of India 03-01-2025
BackgroundGujarat Industrial Development Corporation (GIDC), a nodal agency of the Government of Gujarat, acquires and develops industrial estates and allots plots of land on long-term lease of 99 years to industrial entities, initially by a licensing agreement and subsequently by a registered lease deed, on payment of premium and periodic lease rent. The lease deed permits the lessee to assign leasehold rights to a third party with GIDC's approval. After implementation of GST, the department issued summons and show cause notices to members of the Gujarat Chamber of Commerce and Industry who had assigned their leasehold rights along with buildings constructed thereon on the GIDC plots to third party assignees for lump-sum consideration, demanding GST at 18% by treating such assignment as "supply of service" under the CGST/SGST Act, 2017. The petitioner Chamber made representations contending that such assignment is a transfer of immovable property excluded from GST under Entry 5 of Schedule III, and alternatively, that ITC would be admissible if GST is levied. Since representations were not considered, a batch of 60+ writ petitions were filed, with SCA No. 11345 of 2023 treated as the lead matter.Court Observations (Verbatim)"When such leasehold right is transferred by the lessee-assignor in favour of a third person-assignee by execution of deed of assignment, it would be nothing but transfer of an 'immovable property' in view of the settled legal position to the effect that lease for 99 years or for a long term in consideration of premium paid is as much an alienation as sale or mortgage.""Interest in the immovable property in form of leasehold rights cannot be said to be different than the immovable property itself.""Leasehold rights which are to be considered as sale of land would be out of purview of the provisions of scope of supply as per section 7 of the GST Act.""The scope of 'supply of services' would not include transfer of leasehold rights as supply of service as it would be transfer of 'immovable property' being a benefit arising out of immovable property consisting of land and building.""Clause 5 of Schedule III of the GST Act clearly provides that sale of land cannot be treated as supply of goods or services. Therefore, leasehold rights which are to be considered as sale of land would be out of purview of the provisions of scope of supply as per section 7 of the GST Act.""Under the Service Tax Act, even the development rights which are the benefits arising from land were not liable to tax. Leasehold right is in fact a greater right and interest in land than development rights and the principle under the service tax regime would therefore, continue even to apply under the GST regime as the object of introduction of GST is to subsume the existing taxes.""When the lessee/assignor transfers the land having leasehold rights and building to the assignee, same cannot be considered as supply of service as it would be a transfer of immovable property. Therefore...assignment of leasehold rights equal to the renting of immovable property as per clause 5(b) of the Schedule II would be contrary to such legislative intent.""When the legislature in its wisdom has chosen to exclude the sale of land and building from purview of GST Act, there is no ambiguity that section 7(1)(a) would be applicable to the sale of immovable property and once it is held that assignment of the leasehold rights being the benefit/interest arising out of immovable property would partake the character as such, cannot be covered under the scope of supply of services by any stretch of imagination.""Transfer charges paid by the assignee would be subject to levy of GST but at the same time consideration paid by the assignee to the lessee/assignor would amount to transfer of immovable property which would be out of purview of provision of section 7(1)(a) of the GST Act read with Schedule II and Schedule III thereof."Final VerdictAssignment/sale/transfer of leasehold rights of GIDC-allotted industrial plot along with building by lessee/assignor to third party/assignee for consideration is a transfer of immovable property covered under Clause 5 of Schedule III of the GST Act and not a "supply of service" — hence not liable to GST. All impugned show cause notices and orders/appeals were quashed and set aside. Rule made absolute. Stay of operation of the judgment was also rejected by the Court.
