Madhya Pradesh High Court
M/S Panjon Limited vs Commissioner Cgst And Central Excise on 10 February, 2025
Author: Sushrut Arvind Dharmadhikari
Bench: Sushrut Arvind Dharmadhikari
1 WP-40867-2024
IN THE HIGH COURT OF MADHYA PRADESH
AT INDORE
WP No. 40867 of 2024
(M/S PANJON LIMITED Vs COMMISSIONER CGST AND CENTRAL EXCISE )
Dated : 10-02-2025
Shri H.Y. Mehta - learned counsel for the petitioner.
Shri Prasanna Prasad, learned counsel for the respondent.
Heard on the question admission and interim relief.
2. Learned Counsel for the petitioner submitted these petitions were
initially filed by petitioners challenging common show cause notice
dated 29.09.2023 issued under Section 74 of CGST Act, 2017. When
the matter came up for hearing on 09.01.2025, learned counsel for
respondent was supplied with copy of the petition alongwith
annexures and was granted time to oppose admission and interim relief
sought by the petitioners and the case was ordered to be listed in the
week commencing 20.01.2025. These petitions got listed on
23.01.2025 but in the meanwhile Respondent No. 2 malafidely passed
common final order dated 21.01.2025 in violation of principles of
natural justice upon which the petitioners filed application for
amendment in each petition for challenging common final order dated
21.01.2025 and the said amendment applications were allowed vide
order dated 23.01.2025 and the cases were ordered to be listed today
i.e. on 10.02.2025 but still no reply has been filed by the Respondents
despite the fact that amendment had already been carried out by the
petitioner. Hence, counsel for the petitioner expressing urgency in the
matter, pressed for interim relief and submitted detailed synopsis to
substantiate his arguments.
3. Per Contra, Counsel for the Respondent has again asked for time to file
reply and oppose admission and the prayer for grant of interim relief.
4. Heard and perused the record.
2 WP-40867-2024
5. From the record, it is reflected that the petitioners had initially filed the
present petitions challenging common Show Cause Notice dated
29.09.2023 issued under Section 74 of CGST Act, 2017, mainly on the
ground that the said show cause notice has been issued without
complying with mandatory provisions of Rule 142 of CGST Rules,
2017 as the impugned show cause notice alongwith its summary
thereof were not uploaded on the portal in electronic form and the
impugned show cause notice and subsequent proceedings are liable to
be quashed on this ground itself. To substantiate this ground, reliance
has been placed on various judgments namely, New Hanumat Marbles
Vs. State of Punjab (2023) 5 Centax 75 (P&H), Akash Garg Vs. State
of M.P 2020 (11) TMI 786 (M.P), Shri Shyam Baba Edible Oils Vs.
Chief Commissioner 2023 (7) Centax 81 (M.P), Siddhi Vinayak
Enterprises Vs. State of Jharkhand 2023 (4) Centax 398 (Jhar.),
wherein consistent view has been taken that non-compliance of Rule
142 of CGST Rules would render the show cause notice invalid and
liable to be quashed.
6. Another ground of challenge of common show cause notice dated
29.09.2023 is that the impugned show cause which has been issued
under Section 74 of CGST Act, 2017 is without jurisdiction on
account of the fact that a show cause notice under Section 74 can only
be issued when evasion of tax is alleged whereas in the case at hand
there is no allegation in the entire show cause notice regarding evasion
of tax but the allegation pertain to "circular trading " wherein
admittedly at each step of such trading the petitioners have paid GST.
To substantiate this ground, reliance has been placed on judgment of
hon'ble Apex Court in CC, CE & ST Bangalore (Adj.) etc. Vs.
Northern Operating Systems Private Limited (NOS) in Civil Appeal
No. 2289-2293 on the basis of which CBIC has issued Instruction No.
05/2023-GST dated 13.12.2023 observing that "Therefore, only in the
cases where the investigation indicates that there is material evidence
of fraud or wilful misstatement or suppression of fact to evade tax on
3 WP-40867-2024
the part of the taxpayer, provisions of section 74(1) of CGST Act may
be invoked for issuance of show cause notice, and such evidence
should also be made a part of the show cause notice."
7. It is reflected from record that before this court could hear the case on
the question of admission and interim relief, Respondent No. 2 has
passed common final order dated 21.01.2025 during the pendency of
these petitions to which challenge has been made by the petitioners in
their respective petitions by carrying out amendment in pursuance of
order dated 23.01.2025 of this court, mainly on the ground that since
the show cause notice was itself without jurisdiction and was issued
without complying with mandatory provision of Rule 142 of CGST
Rules, the subsequent order is non est in light of the principle that if
initial action is not in consonance with law, all subsequent and
consequential proceedings would fall through for the reason that
illegality strikes at the root of the order. In such a fact-situation, the
legal maxim "sublato fundamento cadit opus " meaning thereby that
foundation being removed, structure/work falls, comes into play and
applies on all scores in the present case. Also, Once the basis of a
proceeding is gone, all consequential acts, actions, orders would fall to
the ground automatically and this principle is applicable to judicial,
quasi-judicial and administrative proceedings equally. It is also a
settled legal proposition that if an order is bad in its inception, it does
not get sanctified at a later stage. A subsequent action/development
cannot validate an action which was not lawful at its inception, for the
reason that the illegality strikes at the root of the order. It would be
beyond the competence of any authority to validate such an order. To
substantiate this ground, reliance has been placed on State of Punjab
Vs, Debender Pal Singh 2011 (14) S.C.C 770, Badrinath v. State of
Tamil Nadu & Ors., AIR 2000 SC 3243; State of Kerala v. Puthenkavu
N.S.S. Karayogam & Anr., (2001) 10 SCC 191 and State of Orissa &
Others Vs. Mamata Mohanty, (2011) 3 SCC 456.
8. Another ground for challenge of common final order dated 21.01.2025
4 WP-40867-2024
which has been raised is that the petitioners herein specifically sought
right to cross examine witnesses whose testimony are being relied
upon by the Respondents but admittedly such right was not afforded to
the petitioner despite making multiple request and failure to grant
opportunity of cross examination is violative of principles of natural
justice and on this ground common final order dated 21.01.2025 is bad
in law and liable to be set aside. To substantiate this ground, reliance
has been placed on Andaman Timber Industries Vs Commissioner of
Central Excise 2016 (15) SCC 785 a n d Nishad K.U Vs. Joint
Commissioner, Central Tax and Central Excise
MANU/KE/5243/2024.
9. In view of the aforesaid grounds raised by the petitioners, this court is
of the considered opinion that prima facie case exists in favour of the
petitioners and if the common impugned final order dated 21.01.2025
is not stayed during the pendency of the present petitions then the
petitioners would suffer irreparably.
10. Accordingly, these petitions are admitted for final hearing and it is
directed that effect and operation of common impugned final order
dated 21.01.2025 shall remain stayed, pending adjudication of these
petitions.
11. Respondents may file their reply. Rejoinder, if any be filed by the
petitioners thereafter.
12. List the matters for final hearing in due course W.P.No.40861/2024,
W.P.No.40864/2024 and W.P.No.40890/2024..
(SUSHRUT ARVIND DHARMADHIKARI) (GAJENDRA SINGH)
JUDGE JUDGE
HS
