M/S Mk Travels Vs the Deputy Commissioner of Commercial

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NC: 2025:KHC:46948 WP No. 12106 of 2023

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HC-KAR

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IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 17^TH DAY OF NOVEMBER, 2025

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BEFORE

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THE HON'BLE MR. JUSTICE S.R.KRISHNA KUMAR

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WRIT PETITION NO. 12106 OF 2023 (T-RES)

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BETWEEN:

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M/S MK TRAVELS A PARTNERSHIP FIRM CREATED UNDER THE PROVISIONS OF THE PARTNERSHIP ACT 1932 HAVING OFFICE AT NO.42/8, 43, 4^TH FLOOR,

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MK ARCADE NAGAONDANAHLLI MAIN ROAD, IMMADIHALLI WHITEFIELD BANGALORE-560066 REPRESENTED HEREIN BY ITS PARTNER MR A N KRISHNAMURTHY

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…PETITIONER

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Digitally signed by SHARADAVANI B Location: High Court of Karnataka

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(BY SRI. SANDEEP HUILGOL, ADVOCATE)

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AND:

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THE DEPUTY COMMISSIONER OF COMMERCIAL TAXES (AUDIT) 5.2 DGSTO-5 BANGALORE 5TH FLOOR, B BLOCK, VTK-2 RAJENDRANAGAR KORAMANGALA BANGALORE - 560 047

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2 - NC: 2025:KHC:46948 WP No. 12106 of 2023

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HC-KAR

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THE STATE OF KARNATAKA REPRESENTED HEREIN BY THE PRINCIPAL SECRETARY-FINANCE DEPARTMENT, GOVERNMENT OF KARNATAKA VIDHANA SOUDHA BANGALORE-560001

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THE COMMISSIONER OF COMMERCIAL TAXES STATE OF KARNATAKA 1ST FLOOR, VANIJYA THERIGE KARYALAYA KALIDASA MARG, GANDHINAGAR

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BENGALURU-560009

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THE UNION OF INDIA REPRESENTED HEREIN BY THE SECRETARY, DEPARTMENT OF COMMERCE, MINISTRY OF INDUSTRY AND COMMERCE NEW DELHI-110001

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THE UNION OF INDIA REPRESENTED HEREIN BY THE SECRETARY, DEPARTMENT OF REVENUE, MINISTRY OF FINANCE VANIJYA BHAVAN, NEW DELHI-110001

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…RESPONDENTS

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(BY SMT. JYOTI M. MARADI, HCGP FOR R1 TO R3 SRI. MADANAN PILLAI R., CGC FOR R4 TO R5)

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THIS WP IS FILED UNDER ARTICLE 226 OF THE CONSTITUTION OF INDIA PRAYING TO QUASHING THE IMPUGNED ORDER BEARING NO. DCCT(AUDIT)-5.2 /256488/GST/2022-23 DTD 24.04.2023 PASSED BY THE R-1 UNDER SECTION 73 OF THE KARNATAKA GOODS AND SERVICES TAX ACT 2017 FOR THE TAX PERIODS JULY 2017 TO MARCH 2018 (ANNX-A1) AND ETC.

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NC: 2025:KHC:46948 WP No. 12106 of 2023

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HC-KAR

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THIS PETITION, COMING ON FOR PRELIMINARY HEARING, THIS DAY, ORDER WAS MADE THEREIN AS UNDER:

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CORAM: HON'BLE MR. JUSTICE S.R.KRISHNA KUMAR

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ORAL ORDER

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In this petition the petitioner seeks the following reliefs;

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"(1) Quashing the impugned order bearing No. DCCT(Audit)-5.2/256488/GST/2022-23 dated

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24.04.2023 passed by the 1st Respondent under Section 73 of the Karnataka Goods and Services Tax Act, 2017 for the tax periods July 2017 to March 2018 (Annexure 'A-1');

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(II) Quashing the impugned summary of the order bearing DCCT(Audit)-5.2/288419/GST/2023-24 25.04.2023 issued by the 1st Respondent under Section 73 of the Karnataka Goods and Services Tax Act, 2017 read with Rule 142(5) of the Karnataka Goods and Services Tax Rules, 2017 for the tax periods July 2017 to March 2018 (Annexure 'A-2');

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(iii) Quashing the impugned notice dated 02.06.2023 bearing No.DGSTO-5/DCCT5.2/288419/2023-24 issued by the 1^st Respondent under S.78 of the Karnataka Goods and Services Tax Rules, 2017 for

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HC-KAR

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the tax periods July 2017 to March 2018 (Annexure 'A-3');

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(iv) Declaring that in order for a supply of services by a Domestic Tariff Areas supplier to a Unit or Developer of a Special Economic Zone to constitute a zero rated supply under Section 16 of the IGST Act, there is no requirement for the supply-related documents to be endorsed by the authorised officer of the Special Economic Zone in terms of Rule 30(4) of the Special Economic Zones Rules, 2006, especially for the subject tax periods in question; and

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(v) pass such other or further orders as this Hon'ble Court may deem fit in the facts and circumstances of the case, and in the interests of justice and equity."

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Heard learned counsel for the petitioner, learned

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counsel for the respondents and perused the material on the ground.

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In addition to reiterating the various contentions

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urged in the petition and referring to the material on record, learned counsel for the petitioner invited by attention to the impugned order at Annexure - A1 dated

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5 - NC: 2025:KHC:46948 WP No. 12106 of 2023

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HC-KAR

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24.04.2023 passed under Section 73 of the KGST Act, 2017 in order to point out that except audit observation No.1, which has been held against the petitioner, the remaining audit observations have been held in favour of the petitioner by the first respondent - Deputy

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Commissioner.

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In this context, my attention is invited to the impugned order in relation to audit observation No.1 in order to point out that the only reason as to why the said findings recorded against the petitioner is by coming to the conclusion that the petitioner had not submitted any authorized invoices duly endorsed by the SEZ Commissionerate as required under Rule 30(4) of the SEZ Rules, 2006 and the Circular dated 12.09.2019 which specified that DTA Services Procurement Firm was effective from 2018 to October 2019 which specified that endorsement that duty authorises supplies to the SEZ has to be found on the invoices and the same having not been produced, the petitioner would be liable to pay tax and

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HC-KAR

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interest as confirmed by in audit observation No.1 in the impugned order. It is submitted that Rule 30(4) of SEZ Rules, 2006 were amended with effect from 21.09.2018 mandating production of authorized / certified invoices which was prospective in operation and nature and not be applicable to the tax period. Prior to 21.09.2018 when the said Rules were amended and consequently, having referred to the said amended Rules and the Circulars which was issued on 12.09.2019 which also indicates the prospective nature and operation of the said Rules, the first respondent - Deputy Commissioner committed an error in passing the impugned order which is contrary to the said Rules and the material on record and the same deserves to be set aside.

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5. Per contra , learned High Court Government Pleader for the respondents would submit that having regard to availability of equally efficacious and alternative remedy by way of an appeal under Section 107 of the KGST Act, the present petition was not maintainable and was liable to

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7 - NC: 2025:KHC:46948 WP No. 12106 of 2023

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HC-KAR

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be dismissed. It was also submitted that since the petitioner had not produced the duly authorized / certified invoices, the claim of the petitioner has been correctly rejected by the Deputy Commissioner by passing the impugned order which does not warrant interference by this Court in the present petition.

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By way of reply learned counsel for the petitioner submits that since the aforesaid Rule 34 of the SEZ Rules was prospective as also the circular dated 12.09.2019 which would not be applicable to the tax period prior to 21.09.2018, the first respondent would not have jurisdiction or authority of law to initiate the impugned proceedings or pass the impugned order and consequently, mere availability of an alternative remedy by way of an appeal could not come in the way of this Court exercising its jurisdiction under Article 226 of the Constitution of India.

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8 - NC: 2025:KHC:46948 WP No. 12106 of 2023

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HC-KAR

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I have given my anxious consideration to the rival submissions and perused the material on record.

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Before averting to the rival submissions, it would be necessary to extract Rule 30(4) as amended vide Notification dated 19.09.2018 which came into force on

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21.09.2018 which reads as under;

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"(4) A copy of the document referred to in sub-rule (1) or copy of Bill of Export, as the case may be, with an endorsement by the authorised officer that goods have been admitted in full into the Special Economic Zone shall be treated as proof of export and a copy with such endorsement shall also be forwarded by the Unit or Developer to the Goods and Services Tax or Central Excise Officer having jurisdiction over the Domestic Tariff Area supplier within forty-five days failing which the Goods and Services Tax or Central Excise Officer, as the case may be, shall raise demand of tax or duty against the Domestic Tariff Area supplier;

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The respondents have issued the Circular in this regard

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dated 12.09.2019 which reads as under;

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NC: 2025:KHC:46948 WP No. 12106 of 2023

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HC-KAR

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"No.KASEZ/P&C/20/DSPF/2019-20

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Dated:12.09.2019

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CIRCULAR

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I am directed to inform that NSDL (SEZ Online Systems) is going to introduce a new Module called "DTA Service Procurement Form" (DSPF) in upcoming release. The salient feature of the module is that it has been developed to facilitate recording of all Service Invoices for Service availed by SEZ Units from DTA Suppliers and review and approval of the same.

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All Units under SEZ are therefore requested to file the Service Invoice in DSPF format for review and approval of the same. The module may be implemented as a mandatory process for service procurement from October 2019 onwards.

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For more details, office website i.e http:/kasez.gov.in may be visited.

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This issue with the approval of the Zonal Development Commissioner.

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(Dipak zala)

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Dy. Development Commissioner Kandla SEZ, Gandhidham"

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A perusal of the aforesaid Rules and Circular will indicate that the same are prospective in nature and operative and not retrospective in nature, application or operation and would not apply to the tax period prior to 21.09.2018.

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HC-KAR

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In the instant case it is an undisputed fact borne out from the material on record that the impugned proceedings pertain to the tax period July 2017 to March 2018 at a point in time, when neither the said notification amended Rule 30(4) nor the aforesaid Circular were in force and consequently, the first respondent clearly fell in error in applying the said Notification and Circular for the purpose of confirming the demand as against the petitioner, which is clearly contrary to the said Rules and the material on record, apart from being without jurisdiction or authority of law, warranting interference by this Court in the present petition.

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Insofar as the contention urged by learned High Court Government Pleader that the present petition is not maintainable in view of availability of equally efficacious and alternative remedy by way of an appeal under Section

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107 of the KGST Act is concerned, as stated supra , Rule

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HC-KAR

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30(4) of the SEZ Rules and the Circular dated 12.09.2019 being prospective in nature, application and operation, the same would evidently not apply to subject tax period from July 2017 to March 2018, since the said Rules were amended with effect from 21.09.2018 and consequently, the impugned order insofar as it relates to confirming the demand by placing reliance on the prospective Rule and Circular would be clearly without jurisdiction or authority of law and consequently , mere availability of a remedy by

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way of an appeal would not be a bar for this Court exercising its jurisdiction under Article 226 of the Constitution of India. In the result, I proceed to pass the following;

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ORDER

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(i) The writ petition is allowed .

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(ii) The impugned order bearing

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No.DCCT(Audit)-5.2/256488/GST/2022-23 dated

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24.04.2023 passed by the 1^st respondent under

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Section 73 of the Karnataka Goods and Services

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HC-KAR

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Tax Act, 2017 for the tax periods July 2017 to March 2018 (Annexure 'A-1'); the impugned summary of the order bearing DCCT(Audit)5.2/288419/GST/2023-24 25.04.2023 issued by the 1st Respondent under Section 73 of the Karnataka Goods and Services Tax Act, 2017 read with Rule 142(5) of the Karnataka Goods and Services Tax Rules, 2017 for the tax periods July 2017 to March 2018 (Annexure 'A-2'); and

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the impugned notice dated 02.06.2023 bearing No.DGSTO-5/DCCT5.2/288419/2023-24 issued by the 1st Respondent under S.78 of the Karnataka Goods and Services Tax Rules, 2017 for the tax periods July 2017 to March 2018 (Annexure 'A-3') are hereby quashed.

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Sd/(S.R.KRISHNA KUMAR) JUDGE

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GH List No.: 2 Sl No.: 3 CT-SG

M/S Mk Travels v. the Deputy Commissioner of Commercial

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M/S Mk Travels v. the Deputy Commissioner of Commercial

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