SCN to Be Set Aside as It Was Issued by Commissioner Who Was Not Proper Officer for Said Purpose | HC

Case Details: Vigneshwara Transport Company v. Additional Commissioner of Central Tax - [2025] 170 taxmann.com 264 (Karnataka)

Judiciary and Counsel Details

• M.I. Arun, J.
• Pranay Sharma Y., Adv. for the Petitioner.
• Jeevan J. Neeralgi, Adv. for the Respondent.

Facts of the Case

The petitioner, involved in the transportation of goods, was investigated by respondent no.2 (R2) for suspected GST evasion. During this investigation, R2 seized goods, and the petitioner deposited Rs. 50,00,000/- with respondent no.1 (R1) as a provisional payment. After realizing R2 lacked jurisdiction, the case was transferred to respondent no.3 (R3), the proper officer and only the formalities have been completed by him. However, R1 issued a show cause notice based on R2’s findings. The petitioner filed the petition to challenge the show cause notice.

The petitioner argued that the investigation by R2 was unauthorized since R2 was not the proper officer. He contended that the show cause notice issued by R1, which relied on R2’s findings, should be quashed. Additionally, the petitioner sought the refund of Rs. 50,00,000/- deposited under protest.

The respondents argued that the investigation was valid under the CGST Act, despite R2 not being the proper officer. They maintained that the show cause notice issued by R1 was valid, as it was based on the findings from the investigation.

High Court Held

The Court reviewed the provisions of the CGST Act and concluded that only the proper officer could conduct investigations, searches, seizures, and issue show cause notices. Since R2 was not the proper officer, the court found the investigation and actions based on it invalid.

The Court set aside the show cause notice issued by R1 and directed R1 to refund the Rs. 50,00,000/- deposited by the petitioner within eight weeks. Also, R1 was instructed to return the seized goods. However, the Court allowed the respondents to take further action in accordance with the law.

List of Cases Referred to

• Pooran Mal v. The Director of Inspection (Investigation), New Delhi and Others (1974)1 SCC 345 (para 9)
• C. Ramaiah Reddy v. Asstt. CIT [2012] 20 taxmann.com 781/[2011] 339 ITR 210 (Karnataka) (para 10).