Facts of the Case

  • Assessee Profile: The petitioner, M/s Skanda Marketers, is a proprietary concern managed by Sri T.S. Srinivasulu, engaged in commercial business activities in Tumkur, Karnataka.
  • Issuance of Impugned Orders: The petitioner was faced with two separate adjudication orders passed under Section 73 of the CGST/KGST Act, 2017 for the identical tax period spanning from April 2019 to March 2020 (FY 2019-20).
    • First Order: Passed on August 6, 2024, by the Commercial Tax Officer, SGSTO-172, Madhugiri.
    • Second Order: Passed shortly after on August 31, 2024, by the Commercial Tax Officer (Audit), Madhugiri, accompanied by a demand notice in Form GST DRC-07.
  • Dual Authority Inception: The core grievance arose because these parallel proceedings were initiated, managed, and concluded by two completely different tax officers attached to separate wings (regular sub-office vs. audit wing) based on two separate notices.
  • Amnesty Claim: Following the first order, the petitioner submitted an application for waiver of interest and penalty under Section 128A using Form GST SPL-02, seeking shelter under the state amnesty framework.

Issues Involved

  1. Whether the tax department can legally sustain two distinct and parallel adjudication orders under Section 73 of the CGST/KGST Act for the exact same tax period (FY 2019-20) executed by two different field officers.
  2. Whether the impugned orders suffered from a severe breach of natural justice, given the internal factual contradictions within the orders regarding whether the taxpayer had filed a response or failed to show cause.
  3. Whether the High Court should issue a Mandamus directing the tax department to accept the petitioner’s Section 128A Amnesty application at this interim stage.

Petitioner’s Arguments

  • Multiplicity of Proceedings: The petitioner's counsel vehemently argued that having two separate authorities adjudicate turnovers and pass distinct assessment orders under Section 73 for the same financial period is highly irregular, jurisdictional overreach, and legally untenable.
  • Contradictory Record Keeping: It was highlighted that the second impugned order dated August 31, 2024, was inherently flawed; it paradoxically recorded in one section that the petitioner had filed a comprehensive response on August 22, 2024, while noting in another section that the petitioner failed to show cause.
  • Amnesty Protection: The petitioner asserted their right to have their statutory waiver application under Section 128A considered, as they intended to resolve the liabilities under the administrative scheme rather than undergo dual taxation liabilities.

Respondent’s Arguments

  • Failure to Respond at Initial Stages: The learned Additional Government Advocate (AGA) appearing for the State of Karnataka defended the department’s actions by pointing out that the petitioner had completely failed to file responses to the initial statutory intimations issued in Form GST DRC-01A and the subsequent Show Cause Notices.
  • Unreported Turnover Adjustments: The state argued that the parallel proceedings were triggered because certain taxable turnovers had been excluded or omitted by the taxpayer, which caught the attention of both the audit team and the regular jurisdictional office. Therefore, the absence of active participation from the taxpayer led to the ex-parte passing of both orders.

Court Order / Findings

  • Quashing of Parallel Orders: The High Court observed that the core of the issue lay in procedural confusion—two separate officers handling parallel files based on even-dated notices, combined with contradictory statements inside the audit order regarding the receipt of the taxpayer’s objections. Consequently, the Court held that both impugned orders (dated 06.08.2024 and 31.08.2024) must be "jettisoned".
  • Remand for Fresh Adjudication: The High Court formally quashed both orders and restored the proceedings to the second respondent (Commercial Tax Officer) for de novo consideration. The petitioner was granted explicit liberty to file a detailed reply and present additional supporting documentation on or before July 6, 2026.
  • Decline on Amnesty Direction: The Court noted that since the precise structural details of the petitioner’s Section 128A waiver application were not actively forms of the primary case records before it, no formal direction could be given to the department to consider the amnesty scheme at this juncture. The primary focus remained on resetting the structural assessment itself.

Important Clarification

Key Legal Takeaway: A taxpayer cannot be subjected to double jeopardy or parallel adjudications by different wings of the GST Department (such as the jurisdictional circle office and the audit wing) for the same assessment year. Even if a taxpayer fails to respond to initial notices, the department must coordinate internally to ensure a singular, unified adjudication process rather than passing conflicting, multiple orders under Section 73.

Sections Involved

  • Section 73 of the Central Goods and Services Tax Act, 2017 (CGST Act) / Karnataka Goods and Services Tax Act, 2017 (KGST Act): Determination of tax not paid or short paid or erroneously refunded or input tax credit wrongly availed or utilized for any reason other than fraud or any willful-misstatement or suppression of facts.
  • Section 128A of the CGST/KGST Act, 2017: Statutory provisions governing the waiver of interest or penalty, or both, under specific Amnesty Schemes.
  • Articles 226 and 227 of the Constitution of India: Constitutional writ jurisdiction of the High Court invoked to challenge arbitrary administrative action and seek a Writ of Certiorari.

Link to download the order - https://mytaxexpert.co.in/uploads/1783061793_335compressed.pdf

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