Facts of the Case

The petitioner, N. Rama Rao, a resident of Wyra Municipality in Khammam District and described in the proceedings as a social worker, instituted a Public Interest Litigation before the Telangana High Court concerning alleged non-action by the GST authorities against certain cable television service operators.

The grievance raised in the PIL was that the concerned tax authorities had allegedly failed to initiate appropriate action against respondent cable operators in relation to GST stated to have been demanded or collected from television subscribers/customers since 2017. The petitioner also questioned the alleged failure of the authorities to issue appropriate notices requiring such operators to obtain registration under the GST law and carry on business activities in accordance with law.

The private respondents included various cable network and digital service operators. The petitioner sought, among other reliefs, action concerning GST allegedly collected from subscribers, registration under the GST Act, investigation into alleged GST evasion, and consequential action against the concerned operators.

During the pendency of the proceedings, the petitioner expired. His counsel informed the Court of this fact and requested that the matter be treated as a suo motu writ petition.

The Court examined the affidavit filed by Respondent No. 5, the State Tax Officer, Khammam. According to that affidavit, GST had been introduced with effect from 1 July 2017, and the registration requirement was explained with reference to Section 22(1). The affidavit stated that, in the relevant context, a supplier making taxable supplies was liable for registration where the applicable aggregate turnover threshold was exceeded.

The material before the Court further disclosed that the petitioner had submitted RTI applications dated 11 December 2019, 18 December 2019 and 28 August 2020, seeking information regarding payment of GST by Master Satellite Operators (MSOs) and Local Cable Operators (LCOs) in Khammam Town, their registration status, notices issued by the department and action taken concerning alleged non-payment of GST.

The State Tax Officer stated that six MSOs in Khammam Town had been identified as unregistered persons, and assessment notices dated 30 December 2019 had been issued under Section 63 of the TSGST Act, 2017. The proper officer also sought details of LCOs operating under those MSOs for considering assessment proceedings under Section 63.

The affidavit further recorded that five unregistered persons and one registered person submitted objections, broadly contending that their annual turnover was below ₹20 lakh and, therefore, according to them, they were not liable to GST payment or registration. Those objections were stated to be under consideration before the Assistant Commissioner (ST) No. II, Khammam.

Issues Involved

The principal issues arising from the PIL were:

  1. Whether the GST authorities had failed to initiate action regarding GST allegedly collected from television subscribers/customers by the concerned cable operators since 2017.
  2. Whether the concerned cable operators were liable to obtain GST registration under Section 22(1) based on their aggregate turnover and taxable supplies.
  3. Whether proceedings under Section 63 of the TSGST Act, 2017 could be pursued against taxable persons who allegedly failed to obtain registration despite being liable to do so.
  4. Whether the GST authorities were required to examine and decide the objections of the cable operators claiming that their annual turnover was below the applicable registration threshold.
  5. Whether the High Court should direct recovery of alleged GST dues, investigation into alleged GST evasion, suspension of services or cancellation of licences of the private respondents.
  6. What direction was appropriate where the competent GST authority had already initiated proceedings and the objections of the concerned operators remained pending for consideration.

Petitioner’s Arguments

The petitioner’s case, as reflected from the reliefs sought and the proceedings, was substantially that the concerned GST authorities had failed to take effective action against the private cable operators.

The petitioner alleged that:

  • GST had been demanded or collected from television subscribers/customers since 2017;
  • the authorities had not initiated appropriate action for recovery of such GST;
  • the concerned operators had not been properly required to register under the GST law;
  • business activities allegedly being carried on without proper GST compliance required intervention;
  • appropriate notices should be issued to the concerned operators;
  • GST amounts allegedly collected from subscribers should be examined and recovered in accordance with law;
  • alleged GST evasion should be investigated through the appropriate anti-evasion or competent departmental wing; and
  • consequential action should be taken against the concerned operators.

Through the interlocutory applications, the petitioner also sought more stringent reliefs, including stay of services of certain respondents in Khammam Town and consequential cancellation of licences, as well as directions concerning GST allegedly collected since 2017.

Respondents’ Arguments / Stand of the Tax Authorities

The principal stand relevant to the Court’s final order emerged from the affidavit of Respondent No. 5, the State Tax Officer, Khammam.

The tax authority stated that:

  • GST was introduced with effect from 1 July 2017;
  • under Section 22(1), registration liability arose where the statutory conditions, including the applicable aggregate turnover threshold, were satisfied;
  • the petitioner had sought information through RTI applications concerning GST compliance by MSOs and LCOs;
  • six MSOs in Khammam Town had been identified as unregistered persons;
  • assessment notices dated 30 December 2019 had already been issued under Section 63 of the TSGST Act, 2017;
  • details of LCOs under the control of those MSOs had also been sought for considering assessment under Section 63;
  • five unregistered persons and one registered person had filed objections;
  • the objectors claimed that their annual turnover was below ₹20 lakh and, on that basis, asserted that they were not liable for GST payment or registration; and
  • those objections were pending consideration before the Assistant Commissioner (ST) No. II, Khammam, who was the proper officer under the Act.

Thus, the respondents’ material stand was that the statutory process had already been set in motion and that the question of liability required determination by the competent proper officer after considering the objections.

Court Order / Findings

The Telangana High Court took note of the affidavit filed by Respondent No. 5 and the factual position that proceedings had already been initiated against the identified operators.

The Court particularly noted that:

  • notices under Section 63 of the TSGST Act, 2017 had been issued;
  • objections had been filed by the concerned operators;
  • the operators claimed that their annual turnover was below ₹20 lakh;
  • those objections were pending before the competent Assistant Commissioner; and
  • the competent proper officer was required to take an appropriate decision under the GST law.

Having regard to the stand taken by Respondent No. 5, the High Court directed the Assistant Commissioner (ST) No. II, Khammam, being the proper officer under the Central Goods and Services Tax Act, 2017 as well as the Telangana Goods and Services Tax Act, 2017, to take an appropriate decision in the matter within three months from the date of receipt of a copy of the order.

The writ petition was accordingly disposed of. Pending miscellaneous applications, if any, were ordered to stand closed. The Court made no order as to costs.

Important Clarification

This judgment should not be read as a final judicial finding that the concerned cable operators had actually evaded GST, that GST was conclusively recoverable from them, or that every operator was mandatorily liable for registration.

The High Court did not itself determine:

  • the exact turnover of each operator;
  • whether each operator crossed the applicable registration threshold;
  • the final amount of GST, if any, payable by each operator;
  • whether GST allegedly collected from subscribers had actually been retained or evaded;
  • whether the objections filed by the operators were factually correct; or
  • whether penal, recovery, licence-cancellation or other coercive action was warranted.

Instead, the Court directed the competent GST authority to take an appropriate decision within three months.

A further significant clarification is that Section 63 itself incorporates procedural protection: a best-judgment assessment against an unregistered taxable person cannot be passed without giving that person an opportunity of being heard. Therefore, the case reinforces both statutory enforcement and procedural fairness.

Sections Involved

Section 22(1) of the CGST/TSGST Act, 2017 – Persons Liable for Registration:
This provision governs liability for GST registration when the statutory conditions, including the applicable aggregate turnover threshold, are fulfilled. In the present proceedings, the tax authority’s affidavit referred to the ₹20 lakh threshold in the factual and statutory context placed before the Court.

Section 63 of the CGST/TSGST Act, 2017 – Assessment of Unregistered Persons:
This was the central assessment provision involved. It enables the proper officer to proceed with best-judgment assessment where a taxable person fails to obtain registration despite being liable to do so, or in the specified case of cancellation of registration where tax liability continues. The provision also requires an opportunity of being heard before such an assessment order is passed.

Section 29(2) of the CGST/TSGST Act, 2017 – Cancellation of Registration:
Section 63 refers to a person whose registration has been cancelled under Section 29(2) but who remained liable to pay tax.

Sections 73 and 74 of the CGST/TSGST Act, 2017:
These provisions are expressly referred to in the non-obstante opening language of Section 63 and concern determination of tax liabilities in the circumstances specified by those provisions.

Section 44 of the CGST/TSGST Act, 2017:
Section 63 links the limitation period for passing the assessment order to the date specified under Section 44 for furnishing the annual return for the relevant financial year.

Section 151 of the Code of Civil Procedure, 1908:
The interlocutory applications in the PIL invoked the inherent powers provision while seeking interim and consequential directions.

Right to Information Act, 2005:
The factual background included multiple RTI applications filed by the petitioner seeking information regarding GST payment, registration and departmental action concerning MSOs and LCOs

 Link to download the order -https://mytaxexpert.co.in/uploads/1783488868_1429compressed.pdf

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