Panacea Biotec Limited vs Union of India and Ors. — GST and Indirect Tax | Bombay HC (2025)

Panacea Biotec Limited vs Union of India and Ors. — GST and Indirect Tax | Bombay HC (2025)

What the court decided

AI extract

Outcome

Impugned order dated 19 August 2024 in FORM GST DRC-07 quashed and set aside; matter remanded to Respondent No.3 for fresh adjudication of the show cause notice dated 16 July 2024 (FORM GST DRC-01), with liberty to the Petitioner to file a detailed reply within 2 weeks and a personal hearing to be given before any fresh order; Respondent No.3 to consider the Gujarat High Court decision; no order as to costs. The show cause notice itself was not quashed.

Issue for consideration

Whether the GST Authorities can levy GST on a Deed of Assignment under which land and the building constructed thereon is transferred by a Lessee to a third party. +2 more

Court's answer

Respondent No.3 is directed to take into consideration and deal with the Gujarat High Court decision (which, the Court was informed, holds transactions of this kind not amenable to tax under the GST law) whilst rendering findings on the show cause notice; this Court itself did not examine that judgment and left the merits open.

Ratio / Principle

Without entering into the merits, the Court held that the impugned order ought to be set aside and the matter remanded to Respondent No.3 for a fresh adjudication of the show cause notice.

Key takeaways

Operative order: the impugned order dated 19th August 2024 is quashed and set aside, and Respondent No.3 is directed to once again adjudicate the show cause notice.ratio¶23
The remand was justified because the impugned order factually erred in recording that no submissions had been made against the show cause notice, whereas a reply dated 22nd July 2024 had been filed and received the very same day by the Assistant Commissioner of State Tax.ratio¶19

Detailed headnote1 paragraphs

M/s Panacea Biotec Ltd v. Union of India & Ors., Writ Petition No.13587 of 2024, High Court of Judicature at Bombay (B. P. Colabawalla & Firdosh P. Pooniwalla, JJ.), decided 21 January 2025. The Petitioner challenged a show cause notice dated 16.07.2024 (FORM GST DRC-01) and an adjudication order dated 19.08.2024 (FORM GST DRC-07) by which Respondent No.3 proposed to levy GST on a Deed of Assignment transferring land and the building constructed thereon by a lessee to a third party; the Petitioner contended the transaction falls under Item 5 of Schedule III and not Item 2 of Schedule II of the CGST Act, 2017, a contention raised in its reply dated 22.07.2024 but not dealt with in the impugned order. Without going into merits, the Court found the impugned order factually wrong in recording that no submissions had been made, quashed and set it aside, and remanded the matter to Respondent No.3 for fresh adjudication of the show cause notice, permitting the Petitioner to file a detailed reply within 2 weeks, directing a personal hearing before any order, and requiring Respondent No.3 to consider an (uncited) Gujarat High Court decision taking the view that such transactions are not amenable to GST. Writ petition disposed of; no order as to costs. The Court did not itself decide the taxability question.

5.wp.13587.2024.doc

IN THE HIGH COURT OF JUDICATURE AT BOMBAY CIVIL APPELLATE JURISDICTION

WRIT PETITION NO.13587 OF 2024

M/s Panacea Biotec Limited .. Petitioner

Versus

Union of India & Ors. .. Respondents

UTKARSH KAKASAHEB BHALERAO

Digitally signed by UTKARSH KAKASAHEB BHALERAO Date: 2025.01.23 10:26:24 +0530

Mr.Abhishek Rastogi a/w Pooja, Rastogi, Meenal Songire, Arya More Advocates for the Petitioner.

Ms.S.D.Vyas, Addl.G.P. a/w Aditya Deolekar, AGP for State/Respondent Nos.2 and 3.

Ms.S.D.Vyas, Special Counsel a/w Abhishek Mishra , for Respondent No.4.

CORAM :B. P. COLABAWALLA & FIRDOSH P. POONIWALLA, JJ. DATE : JANUARY 21, 2025

P. C.

1. Though several reliefs are claimed in the above Writ Petition, what is seriously pressed before us is prayer clause ii(a) and ii(b) which seeks to quash the show cause notice dated 16^th July 2024 issued by Respondent No.3 in FORM GST DRC-01 and the impugned order dated 19^th August 2024 passed by Respondent No.3 in FORM GST DRC-07.

Page 1 of 4 JANUARY 21, 2025

Utkarsh

5.wp.13587.2024.doc

2. The issue involved is whether the GST Authorities can levy GST on a Deed of Assignment under which the land and the building constructed thereon is transferred by a Lessee to a 3^rd party. According to the Petitioner the transaction in question would fall within Item 5 of Schedule III of the Central Goods and Services Tax Act, 2017 and not under Item 2 of Schedule II of the same Act. This was a contention that was in fact raised in the reply to the show cause notice but the same has not been dealt with at all in the impugned order passed on 19^th August 2024.

3. Considering these facts, we are of the opinion that without going into the merits of the matter it would be in the fitness of things if the impugned order is set aside and the matter is remanded back to Respondent No.3 for a fresh adjudication on the show cause notice. We say this because the impugned order also clearly records that no submissions have been made by the Petitioner against the show cause notice and which is factually incorrect. There was a reply to the show cause notice filed by the Petitioner dated 22^nd July 2024 and which was received by the Assistant Commissioner of State Tax on the very same day. Despite this, the impugned order records that no submissions were made in reply to the show cause notice.

Utkarsh

Page 2 of 4 JANUARY 21, 2025

5.wp.13587.2024.doc

4. In these circumstances, the impugned order dated 19^th August 2024 is hereby quashed and set aside. The 3^rd Respondent is now directed to once again adjudicate the show cause notice. The Petitioner is at liberty to file their detailed reply to the show cause notice within a period of 2 weeks from today. Once the aforesaid reply is filed, Respondent No.3 shall give a personal hearing to the Petitioner and only thereafter pass any order on the show cause notice.

5. We are informed that after the passing of the impugned order, the Gujarat High Court has in fact taken a view that transactions like the one which forms the subject matter of the show cause notice are not amenable to tax under the GST law. We have not examined the aforesaid judgment. However, it is needless to clarify that the 3^rd Respondent shall also take into consideration and deal with the aforesaid decision of the Gujarat High Court whilst rendering its findings on the show cause notice.

6. The Writ Petition is disposed of in the aforesaid terms. However, there shall be no order as to costs.

Page 3 of 4 JANUARY 21, 2025

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5.wp.13587.2024.doc

7. This order will be digitally signed by the Private Secretary/

Personal Assistant of this Court. All concerned will act on production by fax or email of a digitally signed copy of this order.

[FIRDOSH P. POONIWALLA, J.] [B. P. COLABAWALLA, J.]

Page 4 of 4 JANUARY 21, 2025

Utkarsh