Court Sets Aside CGST's Show Cause Notices for Financial Years 2017-18, 2018-19, and 2019-20; Orders Reassessment within Jurisdictional Bounds
In a landmark judgment, the Tripura High Court has ruled in favor of Sri Shekhar Chandra Podder, proprietor of M/S Shekhar Chandra Podder, by setting aside several show cause notices and an order issued by the Central Goods and Services Tax (CGST) authorities. The court found that the CGST authorities had acted beyond their jurisdiction when they initiated proceedings for the financial years 2017-18, 2018-19, and 2019-20.
The Division Bench, comprising Chief Justice M.S. Ramachandra Rao and Justice Biswajit Palit, delivered the judgment on June 30, 2026. The court ruled that the CGST department's initiation of proceedings for FY 2017-18 was impermissible as it was initiated beyond the five-year limit specified in Section 74(10) of the Central Goods and Services Tax Act, 2017. The court clarified that the extension of the deadline for filing annual returns, as per Notification No. 06/2020, applied only to taxpayers and not to the CGST department for initiating proceedings.
For the financial years 2018-19 and 2019-20, the court cited Section 6(2)(b) of the CGST Act, which prohibits parallel proceedings by CGST authorities on issues already covered by State GST (SGST) authorities. The court emphasized that the excess availment of Input Tax Credit (ITC) was already addressed in show cause notices issued by SGST authorities, making CGST's actions on the same matter jurisdictionally invalid.
However, the court upheld the CGST's proceedings for the financial year 2020-21, as the subject matter was deemed distinct and not previously covered by the SGST notices.
The High Court has remitted the matter back to the CGST authorities for reassessment within three months, limited to issues within their jurisdiction. The petitioner has been granted the opportunity to file an additional reply, contesting the preconditions for invoking Section 74 of the CGST Act.
Bottom line:-
Central Goods and Services Tax Act, 2017 - Bar on initiation of parallel proceedings - Section 6(2)(b) prohibits initiation of proceedings on the same subject matter by two tax administrations (CGST and SGST) - Proceedings initiated by CGST authorities found to be beyond jurisdiction for certain financial years due to statutory and procedural limitations.
Statutory provision(s): Central Goods and Services Tax Act, 2017 Section 74(10), Central Goods and Services Tax Act, 2017 Section 6(2)(b), Notification No. 06/2020 dated 03.02.2020, Section 168A of the CGST Act, 2017
Sri Shekhar Chandra Podder v. Union of India, (Tripura)(DB) : Law Finder Doc id # 2937091
