2026-VIL-267-KAR
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SGST High Court Cases

GST - Inter-play of Section 67 and Section 74 of the CGST Act, 2017 - Admissibility of evidence gathered from Search/Seizure proceedings conducted by officers of another Commissionerate – Issue of Show Cause Notice (SCN) based on material gathered during an inspection, search, and seizure action conducted by officers who were later alleged to lack the requisite territorial jurisdiction or proper authorization - Whether an SCN issued under Section 74 is vitiated if the foundational material was collected during proceedings under Section 67 are later deemed infirm or without proper jurisdiction - HELD – The proceedings for determination of tax liability under Section 74 constitute an independent adjudicatory mechanism and are not contingent upon the validity of a prior action under the search and seizure provision under Section 67 - The initiation of proceedings under Section 74 is not necessarily dependent upon an action under Section 67 of the CGST Act. At the most, initiation of proceedings under Section 74 may, in a given case, follow from scrutiny or other proceedings. However, it cannot be held that recourse to Section 74 is conditional upon, or inseparably linked to, the outcome of proceedings under Section 67 - Section 74 of the CGST Act is an independent provision conferring substantive power upon the proper officer to initiate adjudicatory proceedings in the circumstances enumerated therein - The legality or otherwise of the search and seizure proceedings does not, by itself, render the material gathered during such proceedings inadmissible for the purpose of initiating proceedings under Section 74, so long as such material is relevant to the issues involved. There is no prohibition under the CGST Act preventing the proper officer from relying upon material gathered during investigations conducted by officers of another Commissionerate - The contention urged by the respondent–assessee that the SCN under Section 74 is vitiated solely on account of the alleged infirmities in the action under Section 67 cannot be accepted - Once all materials forming the basis of the show cause notice are furnished to the respondent-assessee, it is open to the respondent to raise all permissible contentions regarding relevancy of such material in the course of adjudication under Section 74 of the CGST Act - The order of the ld. Single Judge setting aside the SCN is set aside, and the assessee is granted time to file a reply to the show cause notice, with the appellants-Revenue at liberty to proceed further with the show cause notice in accordance with law – The writ appeal is allowed
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