Facts of the Case

The petitioner, M/s. Reliance Traders (GSTIN 36AABPQ2677E1ZO), Hyderabad, filed a writ petition before the Telangana High Court challenging communication dated 12.10.2021 (C.No. HQAE/V/28/2021-Sec) issued by the Superintendent/Senior Intelligence Officer (Anti-Evasion), Secunderabad GST Commissionerate, demanding reversal of input tax credit of about Rs. 87,37,000 allegedly through coercive and illegal recovery methods, without following the procedure mandated under Section 74 of the CGST Act, 2017. The petitioner sought a mandamus directing the respondents to follow due process under Section 74 before finalizing any demand, and an interim stay on further coercive proceedings pursuant to the impugned communication. By the time the matter was taken up for hearing on 21.11.2023, none appeared for the petitioner.

Issues Involved

  1. Whether the impugned communication demanding reversal of input tax credit without following the Section 74 CGST Act procedure was arbitrary, coercive and illegal.
  2. Whether the writ petition survived for adjudication in view of subsequent developments in the matter.

Petitioner's Arguments

  • The impugned communication dated 12.10.2021 demanded reversal of input tax credit of about Rs. 87,37,000 through coercive and illegal methods, without following the mandatory procedure under Section 74 of the CGST Act, 2017.
  • Sought a direction that the respondents follow due process under Section 74 — issuance of a show cause notice, adequate opportunity, and determination of the actual demand — instead of compelling payment without such process.

Respondent's Arguments

  • The Senior Standing Counsel submitted that, pending the writ petition, a show cause notice dated 15.06.2021 had already been issued, followed by an order-in-original dated 12.11.2021, which was itself independently under challenge in a separate writ petition (W.P. No. 43619 of 2022), in which the Department had already filed its counter.

Court Order/Findings

  • Noting that the subsequent order-in-original arising from the same demand was already under separate challenge in a pending writ petition, the Court held the present petition had become infructuous and dismissed it on that ground, without deciding the Section 74 procedural challenge on merits.
  • Miscellaneous applications, if any, pending in the writ petition were closed, with no order as to costs.

Important Clarification

  • Where the cause of action underlying an earlier writ petition (challenging a pre-adjudication communication or provisional demand) is superseded by a subsequent order-in-original that is independently and separately under challenge, the earlier writ petition becomes infructuous and is dismissed without a decision on its original merits — the taxpayer must pursue the challenge in the petition attacking the final order.

Sections Involved

  • Section 74, Central Goods and Services Tax Act, 2017 — determination of tax not paid, short paid, or input tax credit wrongly availed by reason of fraud, wilful misstatement or suppression of facts; prescribes the show cause notice and adjudication procedure.
  • Article 226, Constitution of India, 1950 — writ jurisdiction invoked.

Decision – In Favour of

Neither party secured a merits ruling. The petition was dismissed as infructuous on the technical ground that a subsequent order-in-original on the same demand is separately under challenge; the substantive Section 74 procedure challenge remains to be adjudicated in that separately pending writ petition, W.P. No. 43619 of 2022.

Related Case Laws

No directly on-point case notes are currently published on this site.

Case Details

  • Court: High Court for the State of Telangana at Hyderabad
  • Case No.: Writ Petition No. 8297 of 2021
  • CNR: Not available in the order
  • Coram: Justice P. Sam Koshy and Justice N. Tukaramji
  • Decision Date: 21.11.2023
  • Disposal Nature: Dismissed as infructuous

Link to Download the Order

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