M/S. Surya Business Private Limited vs The State Of Assam And 3 Ors.

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GAHC010181142026

2026:GAU-
AS:13966-DB

THE GAUHATI HIGH COURT
(HIGH COURT OF ASSAM, NAGALAND, MIZORAM AND ARUNACHAL PRADESH)
Case No. : WA/321/2026
M/S. SURYA BUSINESS PRIVATE LIMITED
A PRIVATE LIMITED COMPANY INCORPORATED UNDER THE PROVISIONS
OF THE COMPANIES ACT, 1956 HAVING ITS PLACE OF BUSINESS AT GAR
ALI, JORHAT, ASSAM 785001, REPRESENTED BY SRI SUBHAJIT ROY,
BRANCH MANAGER OF THE APPELLANT COMPANY..
VERSUS
THE STATE OF ASSAM AND 3 ORS.
REPRESENTED BY THE COMMISSIONER AND SECRETARY TO THE
GOVERNMENT OF ASSAM, DEPARTMENT OF FINANCE AND TAXATION,
ASSAM SECRETARIAT, DISPUR, GUWAHATI 781006
2:THE ASSISTANT COMMISSIONER OF STATE TAX
APEX GST AUDIT CELL
ASSAM
KAR BHAWAN
GANESHGURI
GUWAHATI 781005.
3:THE COMMISSIONER OF STATE TAXES
ASSAM
KAR BHAWAN
GANESHGURI
GUWAHATI 781006.
4:M/S. ATIKUR RAHMAN
22 URBAN CITY COMPLEX
MAHAPURUSH SRIMANTA SANKARDEV PATH
DISPUR
KAMRUP M

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GUWAHATI 781005
ASSAM
Advocate for the Petitioner : MR ANKIT KANODIA, MR. P DAS,MS. N UPADHYAY,MR. Z
ISLAM
Advocate for the Respondent : SC, FINANCE AND TAXATION,

BEFORE
HON’BLE THE CHIEF JUSTICE ASHUTOSH KUMAR
HON’BLE MR JUSTICE ARUN DEV CHOUDHURY

For the Appellant : Mr. Ankit Kanodia, Advocate.
Mr. Zeehan Islam, Advocate.

For the Respondents : Mr. B. Choudhury, Standing
Counsel, Finance and Taxation
Department, Assam,

Mr. M. Bhuyan, Advocate.

Date on which Judgment is
Reserved : N/A

Date of pronouncement of
Judgment : 22.09.2026

Whether the pronouncement
is of the operative part of the
Judgment : NA.

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Whether the full Judgment has
been pronounced : Yes.


JUDGMENT & ORDER ( ORAL )

(A.D.Choudhury, J)

1. Heard Mr. A. Kanodia, learned counsel for the appellant. Also
heard Mr. B. Gogoi, learned Standing Counsel for the Finance and
Taxation Department, Assam, representing the respondents.
2. This present intra-court appeal is directed against the
Judgment and Order dated 10.08.2026 passed by the learned Single
Judge in WP(C) No. 528/2024, whereby the learned Single Judge
declined to interfere with the show cause notice dated 11.01.2024
issued against the appellant under Section 73(1) of the Assam Goods
and Services Tax Act, 2017 (the AGST Act). The learned Single Judge,
however, granted liberty to the appellant to submit its reply to the
show cause notice within 30 days and to raise all the contentions
urged before the court before the proper officer.
3. The facts, in a nutshell, are that the appellant is a Private
Limited Company carrying on business in Jorhat and registered under
the GST enactments.
For the financial year 2018-2019, the appellant was selected for audit
under Section 65 of the AGST Act. During the course of the audit, an
observation dated 13.12.2023 was made alleging excess availment of

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Input Tax Credit (ITC) of approximately 27.25 lakhs.
4. The basis of the audit objection, as projected before us, was
that invoices relating to certain inward supplies from M/s Atikur
Rahman, a registered supplier, were not reflected in the appellant's
GSTR-2A.
The appellant submitted its reply to the audit observation on
17.12.2023. It was contended that the appellant possessed valid tax
invoices, had actually received the supplies, and had paid the value
of the supplies, including the tax component, through banking
channels.
It was further contended that GSTR-2A was merely a facilitating
mechanism and could not, by itself, form the basis for the denial of
Input Tax Credit.

Reliance was placed upon Union of India v. Bharti Airtel Ltd . reported
in (2022) 4 SCC 328 , certain CBIC communications, and other judicial
pronouncements.
5. An Audit Report in the Form GST ADT-02 was thereafter issued
on 08.01.2024, and on 11.01.2024, the impugned show cause notice
was issued under Section 73(1) of the AGST Act, proposing recovery
of disputed Input Tax Credit along with interest and penalty.
6. The appellant challenged the show cause notice before this
court, and an interim order was passed on 05.02.2024 restraining
further proceedings pursuant to the show cause notice. The writ
petition remained pending and was ultimately disposed of by the

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learned Single Judge by the judgment under appeal.
7. The learned Single Judge held that the question of actual
payment of GST to the supplier and the furnishing of returns by the
supplier was a matter that could be examined by the proper officer.
The appellant was granted liberty to raise its contention and rely
upon the judgment cited by it before the proper officer.
8. The appellant has assailed the said judgment in the present
proceedings on several grounds. Since the submissions are
interconnected, we shall deal with them while considering the
questions arising for determination.
9. The principal submission of Mr. Kanodia, learned counsel for
the appellant, is that the appellant is a bona fide purchaser; It had
invoices; had received supplies; had paid the consideration,
including the tax component, through banking channels and had
purchased the goods from a registered supplier. It is therefore
submitted that the appellant cannot be made to suffer merely
because the supplier did not cause the relevant invoices to appear
in GSTR-2A.
10. There is considerable force in the submission that an assessee’s
entitlement to ITR cannot be determined merely by looking at one
electronic statement without examining the statutory conditions
governing availment of such credit. However, at this stage of the
show-cause notice, this court ought not to undertake the
adjudication of the appellant's entitlement to ITR and consequently
quash the notice.

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11. The defense of the appellant against the proposed demand, as
noted hereinabove, is a matter which the appellant is entitled to
establish before the proper officer. Therefore, in our opinion, the
learned Single Judge committed no error in holding that the question
of whether the appellant had actually paid the GST amount to the
supplier and whether the supplier had submitted the relevant returns
could be considered by the proper officer. Therefore, we find no
merit in the submission that the existence of the documents relied
upon by the appellant renders the show-cause notice itself without
jurisdiction.
12. The learned counsel for the appellant has next submitted that
the issue is no longer res integra and has relied upon the decision of
this court in National Plasto Molding –Vs- State of Assam and others
reported in 2024 SCC Online Gau 1595 . It is contended that the
department cannot deny Input Tax Credit to a bona fide purchaser
merely because of a default committed by a selling dealer.
13. We do not propose to examine the ultimate applicability of the
said decision to the appellant's case at this stage. Even assuming that
the appellant is correct in understanding National Plasto Molding
(supra), that decision can certainly be placed before the proper
officer. If the decision is applicable to the facts of the case, the
proper officer is bound to take notice of the same and decide the
matter in accordance with the law declared by this court.
14. The learned Single Judge has specifically preserved this right of
the appellant by permitting it to place the judgments before the

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proper officer.
The appellant's contention regarding GSTR-2A stands on the same
footing. We are not called upon at this stage to pronounce upon the
ultimate entitlement of the appellant.
15. Mr. Kanodia, learned counsel for the appellant, has next
submitted that the respondents did not file any counter-affidavit
despite notice and opportunities granted, and therefore the
appellant's assertions regarding valid invoices, receipt of supplies,
payment through banking channels, and the registration of the
supplier remain uncontroverted.
16. It is true that the absence of a counter-affidavit is a
circumstance which a writ court may take into consideration while
examining a factual controversy. However, in our opinion, it cannot
have the consequence as contended by the appellant in the facts
of the present case inasmuch as the statutory authority had yet to
adjudicate the show-cause notice.
17. The question before the learned Single Judge was whether the
notice itself was liable to be quashed for want of jurisdiction and not
to finally determine the appellant's entitlement to ITR on the basis of
the pleadings made in the writ petition.
Therefore, such arguments do not find favor with us either.
18. Now, coming to the submission that the show cause notice was
issued on 11.01.2024, only three days after the audit report dated
08.01.2024, without dealing with the detailed reply of the appellant

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dated 17.12.2023, and thus demonstrates that the authority had
already made up its mind, does not persuade us any further.
19. Such a fact by itself shall not establish a predetermined mind
inasmuch as an audit finding may legitimately form the basis for
initiation of proceedings under Section 73.
The show cause notice is not the adjudication of the liability, but its
initiation with due opportunity to the appellant.
20. The appellant has also urged that the impugned notice is wholly
without jurisdiction for the reason that the department, without first
proceeding against the defaulting supplier, proceeded against the
recipient.
21. The authority issuing a show-cause notice undoubtedly
possesses jurisdiction to initiate proceedings under Section 73 against
the alleged wrongful availment or utilization of Input Tax Credit;
however, the sustainability of such proposed demand shall depend
upon the adjudication prescribed under Section 73 read with Section
75 of the AGST Act.
22. The appellant's legal defense may ultimately succeed before
the proper officer, but the possibility that the appellant may succeed
in adjudication is not a ground for holding that initiation of the
proceeding itself is without jurisdiction.
23. The appellant has also challenged paragraph 9 (iii) of the
impugned judgment, whereby the learned Single Judge directed
that the period from 12.01.2024 till 10.08.2026 be excluded while

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computing the period of limitation under Section 73(10) of the AGST
Act.
24. Having regard to the peculiar circumstances of the present
date, we find no reason to interfere with the said direction. The
proceedings pursuant to the show-cause notice could not proceed
during the pendency of the writ proceeding due to the interim order
passed by the learned Single Judge.
The learned Single Judge, therefore, while declining to interfere with
the show-cause notice, has consciously directed the exclusion of the
said period during which the matter remained pending before the
learned Single Judge.
25. The fact remains that the appellant has approached this court
against the show-cause notice and has obtained protection against
further proceedings. The period consumed in such proceedings
cannot, in the circumstances of the present case, be permitted to
operate to the prejudice of the statutory proceeding in the manner
apprehended by the appellant.
We therefore decline to interfere with the direction contained in
paragraph 9 (iii) of the judgment under appeal.
26. Accordingly, the learned Single Judge, in our opinion, adopted
an appropriate course by permitting the statutory process to
continue while preserving the appellant's right to raise all its factual
and legal defenses.
27. We, therefore, find no error warranting interference in intra-

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court appellate jurisdiction.
28. The writ petition is accordingly dismissed.
29. The Judgment and Order dated 10.08.2026 passed by the

learned Single Judge in WP(C) No. 528/2024 is affirmed in its entirety.

JUDGE CHIEF JUSTICE
Comparing Assistant