BEFORE THE HON’BLE HIGH COURT OF KARNATAKA

AT BENGALURU

W. P. No. / 2023 (T-RES)

BETWEEN:
M/s. Suresh Bhatia HUF …Petitioners

AND:
The Union of India and Ors. …Respondents
INDEX

Sl. No. Document Page No(s).

1. List of Dates and Synopsis.

2. Memorandum of Writ Petition under

Article 226 of the Constitution of India,
1905.

3. Verifying Affidavit.

4. Annexure A: A copy of the summons

dated 28.07.2023.

5. Annexure B: A copy of the reply

dated _____

6. Annexure C: A copy of the letter

dated 11.08.2023.

7. Annexure D: A copy of the summons

dated 12.10.2023.

8. Annexure E: A copy of the reply

dated 02.11.2023

9. Annexure F: A copy of the order of

the Hon’ble Court dated 12.10.2023

10. Annexure G: The intimation dated

20.12.2023.
 11. Vakalatnama.

12. IA No. ____ of 2023 for dispensation

with certified copies.

Place: Bengaluru
Dated: Advocate for the Petitioner

ADDRESS FOR SERVICE:

BHAT & RAO, Advocates
No. 307, Richmond Towers,
12, Richmond Road, Bengaluru – 25.
E: arjun@arjunrao.in; Ph: (+91) 98805 08071.
 BEFORE THE HON’BLE HIGH COURT OF KARNATAKA
AT BENGALURU

W. P. No. / 2023 (T-RES)

BETWEEN:
M/s. Suresh Bhatia HUF …Petitioners

AND:
The Union of India and Ors. …Respondents

LIST OF DATES

Sl. No. Date Event

1. - The Petitioner is registered under the

provisions of the CGST/KGST Act.
The Petitioner is filing the returns as
prescribed under the act generally by
time and paying the taxes due, if
any.

2. 28.07.2023 The respondent no. 4 issued

summons dated 28.07.2023 calling
upon the petitioner on _______. The
petitioner replied and sought time.

3. 11.08.2023 The respondent no. 4 issued a letter

dated 11.08.2023 to M/s Prestige
Estates Project Limited seeking the
information concerning Petitioner.

4. 12.10.2023 The Respondent no. 4 issued a

summons dated 12.10.2023 u/s 70
 of CGST/KGST Act calling upon the
petitioner on 20.10.2023.

5. 02.11.2023 The petitioner vide reply dated

02.11.2023 submitted all the the
documents as requested by
respondent no. 4.

6. 20.12.2023 The respondent no. 3 without

jurisdiction and even after being
aware that the aforesaid issue is
seized by the Hon’ble High Court has
issued the impugned intimation

7. Present petition is filed.

BRIEF SYNOPSIS

1. The Petitioner No. 1 is registered under the provisions of the

CGST/KGST Act. The Petitioner is filing the returns as prescribed
under the act generally by time and paying the taxes due, if any.

2. The Respondent No. 2 is the Central Board of Indirect Taxes

and Customs. The Respondents no 3 and 4 are the officers of the
Directorate of GST Intelligence discharging the duties under the
Central Goods and Services Tax Act, 2017 (hereinafter referred to
as the “CGST Act”) and Karnataka Goods and Services Tax Act,
2017 (hereinafter referred to as the “KGST Act”).
3. The respondent no. 4 initiated an investigation against the
petitioner by addressing a letter dated 11.08.2023 asking for
documents and transactions with respect to the petitioner. The
respondent no. 4 also issued a summons dated 12.10.2023
seeking the documents from the petitioner. The petitioner vide
reply dated 02.11.2023 submitted all the documents with a request
to drop the proceedings.
4. The respondent no. 3 without the authority of law and
jurisdiction issued the impugned intimation dated 20.12.2023. The
respondent no. 3 has completely disregarded the law and the fact
that he lacks jurisdiction to issue such an intimation.
5. The respondent no. 4 has patently disregarded the fact that
once it is established that there is no evasion of tax and issues are
of interpretation, the respondent no. 4 lacks jurisdiction. The
respondent no.4 cannot exercise jurisdiction granted to assessing
authority/ auditing authority. The aforesaid action defeats the
purpose of separation.
6. Therefore, the impugned intimation is illegal and liable to be
quashed and set-aside.

Place: Bengaluru

Dated: Advocate for the

Petitioner
 BEFORE THE HON’BLE HIGH COURT OF KARNATAKA
AT BENGALURU

W. P. No. / 2023 (T-RES)

BETWEEN:
1. M/s. Suresh Bhatia HUF
A Hindu Undivided Family,
Having its registered office at: 4406, High Point IV, 45 Palac Road,
Bengaluru Urban – Karnataka - 560001
Represented herein by its Karta Mr. Suresh Bhatia,
…Petitioner

AND
1. The Union of India
Represented herein by the Secretary,
Department of Revenue, Ministry of Finance
Government of India, North Block, New Delhi – 110 001

2. Central Board of Indirect Taxes and Customs

Represented herein by the Chairman
Department of Revenue, Ministry of Finance,
Government of India, North Block,
New Delhi – 110 001

3. Additional Director,
Directorate General of GST Intelligence,
Bengaluru Zonal Unit,
No. 112, S.P. Enclave, Adjacent to Karnataka Bank,
K.H. Road, Bengaluru, Karnataka -560027

4. Senior Intelligence Officer,

Directorate General of GST Intelligence,
Bengaluru Zonal Unit,
No. 112, S.P. Enclave, Adjacent to Karnataka Bank,
K.H. Road, Bengaluru, Karnataka -560027

…Respondents

MEMORANDUM OF WRIT PETITION UNDER ARTICLES 226 &

227 OF THE CONSTITUTION OF INDIA, 1950.

The Petitioners humbly submit as below:

1. The address for service of court notice, summons etc. to that
of the Petitioners is that of their counsel, M/s BHAT & RAO, Mr.
Arjun Rao, Ms. Maitreyi Bhat, Ms. Aishwarya Prasad, Mr. Abhijeeth
Suresh, Ms. Ishika Prabhakar and Mr. Raj Rishi Dutta, Advocates,
having their chambers at No. 307, Richmond Towers, 12,
Richmond Road, Bengaluru – 560025, E: arjun@arjunrao.in and
Ph: (+91) 98805 08071.

2. The address for service to the Respondents for similar

purposes is as stated in the cause title.

3. The Petitioner is a Hindu Undivided Family represented by

Karta Shri. Suresh Bhatia and is engaged, inter alia, in the
business of works ________ registered under GST vide registration
number 29AADHB7855H1Z1.

4. The Respondent No. 2 is the Central Board of Indirect Taxes

and Customs. The Respondents no 3 and 4 are the officers of the
Directorate of GST Intelligence discharging the duties under the
Central Goods and Services Tax Act, 2017 (hereinafter referred to
as the “CGST Act”) and Karnataka Goods and Services Tax Act,
2017 (hereinafter referred to as the “KGST Act”).

5. The Petitioner is registered under the provisions of the

CGST/KGST Act. The Petitioner is filing the returns as prescribed
under the act generally by time and paying the taxes due, if any.

6. The Petitioner has its registered place of business at 4406,

High Point IV, 45 Palac Road, Bengaluru Urban – Karnataka -
560001
Investigation initiated by the Respondent No. 4

7. The respondent no. 4 issued summons dated 28.07.2023

calling upon the petitioner on _______. The petitioner replied and
sought time. A copy of the summons dated 28.07.2023 is attached
as Annexure A. A copy of the reply dated _____ is attached as
Annexure B.

8. The respondent no. 4 issued a letter dated 11.08.2023 to

M/s Prestige Estates Project Limited seeking the information
concerning Petitioner. The information regarding the sale of flats of
landowner share in Prestige Royal Garden was sought. A copy was
marked to the petitioner. A copy of the letter dated 11.08.2023 is
attached as Annexure C.

9. Pursuant to the above the Respondent no. 4 issued a

summons dated 12.10.2023 u/s 70 of CGST/KGST Act calling upon
the petitioner on 20.10.2023. The respondent sought documents
with respect to ITC utilization received from M/s Prestige Estates
Project Limited and other documents. A copy of the summons
dated 12.10.2023 is attached as Annexure D.

10. The petitioner attended the office of Respondent No. 4 in

compliance with the summons.

11. The petitioner vide reply dated 02.11.2023 submitted all the
documents as requested by respondent no. 4. The petitioner
further submitted that the project “Prestige Royal Gardens” was
started before the commencement of the GST. The CENVAT credit
was availed before the pre-GST era and the same is under dispute
before the Hon’ble High Court. A copy of the reply dated
02.11.2023 is annexed as Annexure E. A copy of the order of the
Hon’ble Court granting stay is attached as Annexure F.

Impugned intimation in GST DRC 01A u/s 74(1) of the

CGST/KGST Act dated 20.12.2023

12. However, without considering the reply of the petitioner and

the fact that the ITC proposed to be disallowed or liable to be
reversed is a matter of interpretation the petitioner has been
directed to reverse the aforesaid ITC by the respondent no. 3. The
intimation specifies the following liabilities

i. Liability to reverse proportionate ITC of Rs.

24,00,31,735/- in terms of Section 17(2) of CGST
Act,2017 read with Rule 42 of CGST Rules, 2017 to the
extent of un-booked units as on date of OC in respect of
their share in Prestige Royale Garden Project for the flats
available for booking in GST period;
ii. Liability to pay GST of Rs. 1,42,19,424/- on the
suppressed turnover towards units sold prior to OC;
iii. Liability to pay wrongly utilized ITC of Rs. 29,63,946/-
used towards payment of GST @7.5%/1.5% for the sale
of flats in Godrej Royale Woods project under new scheme
of taxation in violation of condition laid down under
Notification 03/ 2019- C'I‘(R) dated 28-03-2019;

13. The respondent no. 3 without jurisdiction has issued the

impugned intimation. The intimation dated 20.12.2023 is attached
as Annexure G.
14. In the circumstances, the Petitioner has no other efficacious
alternative remedy whatsoever to secure relief but to approach this
Hon’ble Court by way of the present writ petition. The Petitioner
submits that it has not filed any other writ petition or initiated any
other proceedings either before this Hon’ble Court or before any
other Court or Forum on the same cause of action. Hence, this writ
petition on the following amongst others:

GROUNDS

15. The impugned intimation dated 20.12.2023 is without

jurisdiction: The Petitioner submits that the impugned intimation
is completely without jurisdiction for the following reasons infra:
16. First, Respondents 3 and 4 are not the officers appointed
under the CGST/KGST Act. Respondent No. 2 by way of notification
no. 14/2017 dated 01.07.2017 have vested the officers of the
Directorate General of GST Intelligence (hereinafter referred to as
“DGGI”) powers of the Central Tax Officers as per the designation
specified in the notification. Respondent No. 2 vide Circular No.
3/3/2017 dated 05.07.2017 has assigned the functions as the
proper officers in relation to the various sections of the Central
Goods and Services Tax Act, 2017 or the rules made thereunder.
17. Second, in the facts of the present case the impugned
intimation u/s 74(1) of the CGST/KGST Act, 2017 has been issued
by Respondent No. 3 who is an Additional Director and in terms of
Notification No. 14/2017 can excise powers vested in Additional
Commissioner. The Additional Commissioner has not been vested
with powers and functions u/s 74 of the CGST/KGST Act, 2017 as
per Circular 3/3/2017 dated 05.07.2017. Therefore, the
respondent no. 3 the Additional Director exercising powers of the
Additional Commissioner has no jurisdiction. Thus, the impugned
intimation is liable to be quashed and set aside.
18. Third, the project “Prestige Royal Gardens” commenced
before the introduction of GST. The petitioner has claimed CENVAT
Credit on the invoices issued by the M/s Prestige Estates Pvt. Ltd
for the construction of the flats as per their share in the Joint
Development Agreement. The department vide show cause notice
dated 11.06.2020 proposed to deny the CENVAT credit claimed by
the petitioner in the pre-GST era. The petitioner has challenged the
show cause notice before this Hon’ble Court in Writ Petition No.
11202/2020. This Hon’ble Court has granted a stay on the show
cause notice vide order dated 12.10.2020. The dispute about
whether the petitioner would be eligible for the CENVAT Credit is
pending and depends upon the outcome of the Writ Petition No.
11202/2020. The respondent no. 3 does not consider the
aforesaid fact and proceeds to issue intimation u/s 74(1) which
directs the petitioner to reverse the credit.

19. The Petitioner submits that, the jurisdiction cannot be

presumed and authority cannot proceed in the matter, on the basis
of presumption, unless it is duly vested with power, which, as
stated above, in the present case, on the face of it is absent, and
nothing has been stated how the jurisdiction has been assumed by
the Respondent offices. The Hon’ble Supreme Court in the case of
CST, U.P. v Sarjoo Prasad Ram Kumar, [1967] 37 STC 533
(SC) has held that the objection as to jurisdiction goes to the root
of the case. Thus, it is settled law that the jurisdiction goes into the
root of the subject matter.
20. The Hon’ble Bombay High Court in the case of Kiran Gems
Pvt. Ltd. vs. Union of India 2021-TIOL-237-HC-MUM-ST held
as under:

“19. Further submission of learned counsel for the Petitioner that

the Central Goods and Services Tax Act, 2017 has no provision
empowering CERA to conduct audit of the Petitioner's records also
merits acceptance. Brief perusal of the annexure to the impugned
communication reveals that detailed audit of the Petitioner's
accounts and records is sought for the period 2015-16 to 2017-18
i.e. for a period of three years by Respondent No.3. Such a
detailed audit can only be called for under relevant and specific
statutes. It is settled law that jurisdiction goes to the root of a
matter and power of any authority invoking such jurisdiction to call
for special audit needs to be traceable to the relevant statutory
provision. In the absence of statutory backing, such an exercise of
power would be invalid and nonest. In the present case, the
impugned notice / letter dated 10.01.2019 calls for CERA audit and
Respondents in their affidavit-in-reply have relied on the provisions
of Section 16 of the CAG's (DPC) Act to justify the impugned
communication. If that be the case then as discussed hereinabove,
the Respondent's action is wholly without jurisdiction and
unconstitutional”
….(emphasis supplied)

21. The Petitioner submits that the entire proceedings are

without jurisdiction. Thus, impugned intimtion is liable to be
quashed and set aside.
22. The impugned intimation is vague and cryptic: The
Petitioner submits that the impugned intimation is completely
vague and fail to explain why the liability has been fastened. The
detailed explanation and reasons are completely missing. Hence,
on this ground, the impugned intimation is liable to be quashed
and set aside.

23. In support of the above submission, the Petitioner relies

upon decision of the Hon’ble Supreme Court in the case of
Amrit Foods vs. CCE - 2005 (190) ELT 433 (SC), wherein the
Hon’ble Supreme Court has held that the assessee has to be put on
notice as to the exact nature of contravention for which he is liable.
Relevant extract from the said judgment is reproduced herewith as
under:
“5. The Revenue has preferred an appeal from the order of the
Tribunal setting aside the imposition of penalty under Rule 173Q of
the Central Excise Rules, 1944.The Tribunal has set aside the order
of the Commissioner on the ground that neither the show cause
notice nor the order of the Commissioner specified which particular
clause of Rule 173Q had been allegedly contravened by the
Respondent. We are of the view that the finding of the Tribunal is
correct. Rule 173Q contains six clauses the contents of which are
not same. It was, therefore, necessary for the assessee to be put
on notice as to the exact nature of contravention for which the
assessee was liable under the provisions of the 173Q. This not
having been done the Tribunal’s finding cannot be faulted.”
… (underlining supplied)
24. The Hon’ble Supreme Court in CCE vs. Brindavan
Beverages (P) Ltd- (2007) 213 ELT 487 (SC) has explained
the importance of a show cause notice in the following words:

“10…… The show cause notice is the foundation on which the

department has to build up its case. If the allegations in the show
cause notice are not specific and are on the contrary vague, lack
details and/or unintelligible that is sufficient to hold the
Respondent was not given proper opportunity to meet the
allegations indicated in the show cause notice….”

25. In the present case, it was incumbent upon the intimation to

explain the process of reasoning as to how the Petitioner was liable
to discharge the tax which, it is submitted, where the intimation
fails. Hence, the intimation being completely bereft of reasoning,
should be quashed and set aside.

The respondent no.3 has acted beyond jurisdiction as the

present case is not of evasion of tax and Section 74 has
been wrongly invoked.
26. The petitioner submits that the function of the respondent
no.3 is to detect the cases involving the evasion of tax. In the
present case, admittedly the respondent no. 3 is seeking the
reversal of the input tax credit in terms of Section 17(2) of CGST
Act,2017 read with Rule 42 of CGST Rules, 2017 to the extent of
un-booked units as on date of OC in respect of their share in
Prestige Royale Garden Project for the flats available for booking in
GST period. The aforesaid alleged violation cannot by any stretch
of the imagination can be called as “Evasion of Tax”. The petitioner
submits that Section 74 has been wrongly invoked.
27. The petitioner relies upon the Charter of Functions of the
DGGI wherein it has been specified as under
1) Collection, collation and dissemination of intelligence
relating to evasion of GST & Central Excise on an all India
basis.
2) Investigating offences having ramification in one or more
than one Commissionerates / States, including
investigation of complicated cases.
3) Studying the modus-operandi of evasion of GST and to
alert the concerned field formation about it and to suggest
policy measures to CBIC.
4) Coordinating action with other enforcement agencies like
CEIB, Income Tax, ED, State GST Departments etc.
5) Supplementing and coordinating the efforts of field
formations in the investigation, wherever necessary.
28. The Changing role of DGGI has been stated in the Annual
Report of DGGI for 2022-23 wherein it has been stated under
“GST with its emphasis on advanced IT infrastructure, made
a paradigm shift towards technology and data driven indirect
tax administration in India. CBIC has, in recent years,
invested a lot in development of data analytical tools,
predictive modelling, data visualization tools and big data
analysis so as to equip its officers with world-class IT
infrastructure. The DGGI, as an organization, is no exception
to this ongoing change. It has steadily moved towards
intelligence gathering by way of various advanced tools of
data analytics in addition its intelligence network across the
country. DGGI has transformed the contours of intelligence
gathering by using the enormous database of GST Network
to focus on areas of tax evasion. Many new modus operandi
 in the GST era have been unearthed by using these
sophisticated tools. The intelligence collected and developed
by DGGI is either ploughed into action directly by its officers,
or shared with the Commissionerate depending upon the
scale and reach of the case. The most significant outcome of
the federal nature of GST is the partnership of Centre and
State in enforcement actions. The jurisdiction of State
enforcement authorities extends to the entire state whereas
the jurisdiction of Centre enforcement authorities (such as
DGGI) extends to the whole territory of India. The DGGI is
better suited to carry out operations in cases where there are
multiple jurisdictions involved.”
29. Thus, it is clear that the DGGI has been vested the power to
investigate matters involving the evasion of tax. In the facts of the
present case, there is no evasion therefore the entire investigation
is bad in law. The issue of reversal of credit or utilisation of credit
is beyond the purview of evasion of tax thus the intimation is
beyond the jurisdiction.
30. The petitioner submits that intervention by Revenue is
permitted in specified circumstances subject to specified conditions
along with necessary checks and balances in each such situation
where intervention is warranted. By a general or special order of
Respondent No. 4, Proper Officers are empowered to carry out
verification of the correctness of compliances under section 65 of
GST Acts (‘Audit Enquiry’). And where there are sufficient reasons
to believe, based on cogent material taken on record by Proper
Officer not below the rank of Joint Commissioner, that ‘evasion of
tax’ has taken place may authorize any Officer designated to be
the Investigating Officer under section 67 of GST Acts (‘Evasion
Inquiry’). The proper Officer empowered to conduct an Audit
Enquiry is not the Investigating Officer authorized to conduct
Evasion Inquiry as per law. The scope and extent of an Evasion
Inquiry is a sub-set of the scope and extent of an Audit Enquiry,
but of utmost importance is the fact that the Proper Officer is
vested with authority to discharge duties under sections 65 and 67,
respectively, of GST Acts are not the same person.
31. Neither of these proceedings – Audit Enquiry or Evasion
Inquiry – can be conducted sans prior approval or authorization.
GST Acts lays down entirely dissimilar pre-requisites and pre-
conditions to invoke authority under section 65 to conduct Audit
Enquiry and under section 67 to carryout Evasion Inquiry.
Difference between ‘enquiry’ and ‘inquiry’ is brought out well in
Baleshwar Bagarti v. Bhagirathi Dass ILR 35 Cal 701 wherein
it was held that:

“the traditional distinction between the verbs ‘enquire’ and ‘inquire’

is that enquire is to be used for general senses of ‘ask’, while
inquire is reserved for uses meaning ‘make a formal investigation’”.

And this distinction in law touches the very pith of authority.

32. Where any Audit Enquiry or Evasion Inquiry results in
demand for tax, credit or refund, Chapter XV of GST Acts requires
that demand be raised by issuing a ‘show cause notice’. A notice of
demand is required to be issued under section 73 of GST Acts
where the demand is on account of bona fide misadventure in self-
assessment of Output Tax resulting in tax not paid or short paid or
erroneously refunded or input tax credit wrongly availed or utilised
(‘Regular Notice’). And where the pre-notice proceedings reveal
mala fides in self-assessment and demand unearthed by
investigation fraught with such extenuating or special
circumstances that expose indulgence in perpetrating fraud or any
willful-misstatement or suppression of facts (‘Evasion Notice’)
when the notice of demand is required to be issued under section
74 of GST Acts. It is important to note that section 75(2) of GST
Acts permits that a notice for Evasion Notice issued under section
74 will be “deemed as if” the notice was issued under section 73 of
GST Acts if the extenuating or special circumstances of – “fraud or
any willful-misstatement or suppression of facts” – are not
satisfied.
33. The difference between Regular Notice and Evasion Notice is
that (i) the limitation is longer and (ii) penalties are aggravated, in
Evasion Notice compared to notice for Regular Notice.
34. Not every instance of non-payment of tax for whatever
reason is tantamount to ‘evasion of tax’. That is not the scheme of
the law. Evasion of tax requires (i) liability found to be
undischarged in self-assessment by taxpayer (ii) while being seized
of knowledge about existence of such liability (iii) means deployed
that either conceals relevant material or renders detection
impossible without use of investigative methods and (iv) gains
directly and deliberated derived by such taxpayer, that would not
have been exposed but for investigation. In the absence of all of
these ingredients, every benign demand cannot be foisted as an
Evasion Notice, as it would not only be illegal for being without
authority of law but also for being a demand without jurisdiction
where issued by an Officer who is not the Proper Officer.
35. The petitioner places reliance on the Circular No.
1053/02/2017-CX wherein it has been stated that the extended
period of limitation cannot be invoked in the matters involving the
interpretation wherein it has to be decided with respect to levy or
short levy. The aforesaid circular is binding upon the respondent
no. 3 as held by various Hon’ble Courts.
36. The petitioner submits that the scope of jurisdiction of
respondent no. 3 is “evasion of tax” Once it has been held that
there is no evasion of tax the respondent no. 3 should have closed
the proceedings. If there are any findings with respect to eligibility
of ITC same could have been very well communicated to the
proper officer for Audit/ Scrutiny in terms of Section 65 of Section
61. The respondent no. 3 have resorted to exercising the powers of
Scrutiny/Audit which is beyond jurisdiction as the jurisdiction of
officers of DGGI are confined only on evasion of tax.
37. Thus, the impugned intimation is liable to be quashed and
set-aside.

Without Prejudice, the petitioner submits that the petitioner

is not liable to reverse the ITC in terms of Rule 42 of the
CGST/KGST Rules, 2017

38. Section 2 of the CGST Act defines the term “input tax” as
central tax, state tax, integrated tax or Union Territory tax charged
on any supply of services or goods or both made to him. “Input tax
Credit” has been defined as credit of input tax.
39. Section 16(1) of CGST Act, 2017 provides that:
“every registered person shall, subject to such conditions and
restrictions as may be prescribed and in the manner specified
in section 49, be entitled to take credit of input tax charged
on any supply of goods or services or both to him which are
used or intended to be used in the course or furtherance of
his business and the said amount shall be credited to the
electronic credit ledger of such person”
40. Thus, from the above provision, it is evident that credit of tax
paid on all inputs and input services can be availed which are used
in the course or furtherance of business.
41. However, the above right is not unfettered. It is not an
absolute right. It is a conditional right. The conditions are
stipulated under section 16(2) thereof. The conditions of Section
16 are satisfied by the petitioner same is not under dispute.
42. However, there is a bar on the availment of credit as well.
Section 17 of the CGST act lays down certain restrictions with
respect to the availment of credit. Section 17(1) provides that
where the goods or services are partly used for purposes of
business and partly for other purposes, the amount of credit shall
be restricted to so much of the input tax as is attributable to the
purposes of his business.
43. Section 17(2) provides that where the goods or services or
both are used by the registered person partly for effecting taxable
supplies including zero-rated supplies under the CGST Act, 2017 or
under the Integrated Goods and Services Tax Act, 2017 (IGST Act,
2017) and partly for effecting exempt supplies under the said Acts,
the amount of credit shall be restricted to so much of the input tax
as is attributable to the said taxable supplies including zero-rated
supplies. Section 17(3) of the Act provides that the value of
exempt supply shall include supplies on which the recipient is liable
to pay tax on reverse charge basis, transactions in securities, sale
of land and, subject to clause (b) of paragraph 5 of Schedule II,
sale of building.
44. Section 17(6) of the Act provides that the Government may
prescribe the manner in which credit referred to in sub-sections (1)
and (2) may be attributed. In terms of section 17(6), Rule 42 has
been enacted.
45. The petitioner submits that the reversal of the ITC if incorrect
for the following reasons
46. Section 7 of the CGST Act, 2017 provides for the scope of
supply. It is, inter alia, provided that “supply” includes: (a) all
forms of supply of goods or services or both such as sale, transfer,
barter, exchange, license, rental, lease or disposal made or agreed
to be made for a consideration by a person in the course or
furtherance of business; (b) import of services for a consideration
whether or not in the course or furtherance of business; (c) the
activities specified in Schedule I, made or agreed to be made
without a consideration; and (d) the activities to be treated as
supply of goods or supply of services as referred to in Schedule II.
Clause (d) has, now, with effect from 01.02.2019, rechristened as
new sub-section (1A).
47. Section 9 is the charging section. It provides for levy of tax
called the CGST on all intra-state supplies of goods or services or
both and at such rates, as may be notified by the Government on
the recommendations of the Council and collected in such manner
as may be prescribed and shall be paid by the taxable person.
48. Schedule II of the CGST provides list of activities/ transaction
to be treated as deemed supply of goods or services. For the
present case, Entry 5(b) of Schedule II is relevant, which reads as
under:
“5. Supply of services
The following shall be treated as supply of services, namely :
—
…
(b) construction of a complex, building, civil structure or a
part thereof, including a complex or building intended for
sale to a buyer, wholly or partly, except where the entire
consideration has been received after issuance of completion
 certificate, where required, by the competent authority or
after its first occupation, whichever is earlier.”

49. From perusal of the above entry, it can be understood that

construction of building or a part thereof intended for sale to a
buyer, wholly or partly, shall be treated as deemed supply of
service. However, there is one exception. The said entry does not
cover transaction where consideration is received after issuance of
completion certificate or after its first occupation, whichever is
earlier. The same is covered within the purview of Entry 5 of
Schedule III of the CGST Act which provides for list of activities or
transaction which shall be treated neither as supply of goods nor a
supply of service. The same reads as under:
“5. Sale of land and, subject to clause (b) of paragraph 5 of
Schedule II, sale of building.”
50. Thus from a conjoint reading of the above two entries, it can
be understood that where even a part consideration towards sale
of flat is received before issuance of the completion certificate or
before first occupation in the building in which such flat is located,
the said transaction shall be deemed supply of service and GST
shall be leviable on the same. In other words, the only transaction
which is out of the purview of GST is the transaction where the
entire consideration is received after issuance of the completion
certificate or after first occupation in the building in which such flat
is located. In the present case, the flats are handed over after
receipt of the OC.
51. As explained above in terms of section 17, if any person is
involved in providing exempt services, then such person is liable to
reverse the credit pertaining to such exempt supply. However, in
the present case i.e. on transaction pertaining to sale of flats after
the receipt of Occupation Certificate (hereinafter referred to as
‘OC’), section 17 is not applicable.
52. However, the petitioner submits that this exemption entry is
without jurisdiction. The Government is not empowered to exempt
something which is not leviable to tax. Section 9 of the act clearly
specifies that the government can levy tax on something which is
supply of goods or service. The term supply is defined under
section 7 of the CGST Act, 2017. The taxable event under GST is
“supply” of goods or services or both.
53. The term goods is defined under section 2(52) of the CGST
Act, 2017 as movable property other than money and securities
are goods. Whereas section 2(102) of the act defines service as
anything other than goods, money or securities.
54. In the instant case, the petitioner has sold post receipt of
completion certificate and consequently, no GST is paid on such
sale of flats.
55. Section 7(2)(a) of the CGST Act, 2017 provides for activities
or transactions specified in Schedule III which shall be treated
neither as a supply of goods nor a supply of services. As explained
supra the sale of flats after the receipt of OC would be covered
under Paragraph 5 of Schedule III.
56. Thus, on a conjoint reading of the above provisions it is clear
that an activity which is not a ‘supply’ under Section 7 can certainly
not be classified as an ‘exempted supply’ under section 2(47).
Hence, as such, the provisions of section 17(2) would not be
attracted in that case. Consequently, the provisions of section
17(3) read with Rule 42 would have no application.
57. Therefore, the sale of flats after the receipt of OC is not a
supply under section 7. Once a transaction is not a supply it cannot
be considered as an exempt supply because for a supply to be
exempt it has to be a supply first, which is not in the present case.
Therefore, the sale of flats after receipt of OC is not an exempt
supply. Once it is not an exempt supply, the provision of section
17(2) will not be applicable and hence, the petitioner is not
required to reverse the ITC under Rule 42.

The petitioner submits that there is no bar for the utilisation

of ITC for discharging the tax liability.
58. The petitioner submits that there is no bar on utilisation of
the ITC to discharge the liability in terms of Section 49 of the
CGST/KGST Act, 2017.
59. The respondent no. 3 has proposed to recover Liability to pay
wrongly utilized ITC of Rs. 29,63,946/- used towards payment of
GST @7.5%/1.5% for the sale of flats in Godrej Royale Woods
project under new scheme of taxation in violation of condition laid
down under Notification 03/ 2019- C'I‘(R) dated 28-03-2019.
60. The petitioner submits that the aforesaid notification is no
applicable on him as he is not a promoter/developer in the facts of
the present case. The aforesaid notification is only applicable to the
developer which in present case is Prestige Realty Pvt. Ltd. for the
following reasons
61. At the outset, we must point out that for the reasons stated
above, there is no levy. Hence, the question of a charge being
created by way of a notification (issued by subordinate legislature)
does not arise. In Larsen & Toubro Limited v. State of
Karnataka 2014 (34) STR 481 (SC), the Apex Court held that
Circulars or other instructions could not provide the machinery
provisions for levy of tax. The charging provisions as well as the
machinery for its computation must be provided in the Statute or
the Rules framed under the Statute. The above position was
reiterated in Suresh Kumar Bansalv. Union of India 2016 (43)
STR 3 (Del).
62. Thus, to decide the applicability of this notification in the
present case, we need to look at the statutory definitions. The term
“project” is defined in clause (k) of Notification no. 13/2017 ibid as
a Real Estate Project or a Residential Real Estate Project. The term
“Real Estate Project” (REP) is defined under clause (l) of the
notification no. 13/2017 as having the same meaning as assigned
to in clause (zn) of section 2 of the Real Estate (Regulation and
Development) Act, 2016 (RERA). The term “Residential Real Estate
project” (RREP) is defined under clause (m) of the notification no.
13/2017 as REP in which the carpet area of the commercial
apartments is not more than 15 per cent of the total carpet area of
all the apartments in the REP.
63. The term ‘promoter’ has been defined in clause (j) of the
notification no. 13/2017. The same is reproduced below:
“(j) the term ‘promoter’ shall have the meaning as assigned
to it in clause (zk) under section 2 of the Real Estate (Regulation
and Development) Act, 2016”

64. The definition of the term promoter is reproduced below

(zk) “promoter” means,— (i) a person who constructs or
causes to be constructed an independent building or a
building consisting of apartments, or converts an
existing building or a part thereof into apartments, for
the purpose of selling all or some of the apartments to
other persons and includes his assignees; or (ii) a
person who develops land into a project, whether or not
the person also constructs structures on any of the
plots, for the purpose of selling to other persons all or
some of the plots in the said project, whether with or
 without structures thereon; or (iii) any development
authority or any other public body in respect of allottees
of— (a) buildings or apartments, as the case may be,
constructed by such authority or body on lands owned
by them or placed at their disposal by the Government;
or (b) plots owned by such authority or body or placed
at their disposal by the Government, for the purpose of
selling all or some of the apartments or plots; or (iv) an
apex State level co-operative housing finance society
and a primary co-operative housing society which
constructs apartments or buildings for its Members or in
respect of the allottees of such apartments or buildings;
or (v) any other person who acts himself as a builder,
coloniser, contractor, developer, estate developer or by
any other name or claims to be acting as the holder of a
power of attorney from the owner of the land on which
the building or apartment is constructed or plot is
developed for sale; or (vi) such other person who
constructs any building or apartment for sale to the
general public. Explanation.—For the purposes of this
clause, where the person who constructs or converts a
building into apartments or develops a plot for sale and
the person who sells apartments or plots are different
person, both of them shall be deemed to be the
promoters and shall be jointly liable as such for the
functions and responsibilities specified under this Act or
the rules and regulations made thereunder;
65. The aforesaid definition makes it clear that a promoter is a
person who constructs flats intending to sell. In the present case,
the petitioner has received the flats as a part of consideration
under the agreement. Therefore, as the petitioner has not
constructed the flats and apartment with an intention to sell the
present condition does not apply.
66. Without Prejudice, whether the aforesaid notification is
applicable or not is a matter of interpretation. This cannot be called
as evasion of tax. Thus, the impugned notification is liable to be
quashed and set-aside.
67. The petitioner submits that the impugned intimation is time
barred. Once it is established that there is no suppression, wilful
misstatement or fraud. The intimation u/s 74 by way of Section 75
(2) becomes an intimation u/s 73. The last date for issuing show
cause notice u/s 73 for the year 2017-2018 was 30.09.2023. The
present intimation is issued after that. Therefore, the intimation is
time barred. On this ground alone, the impugned intimation is
liable to be quashed and set-aside.

GROUNDS FOR INTERIM PRAYER

68.[67.] The Petitioner submits that it has made out an eminently

fit case for interference by this Hon’ble Court. The Petitioner is
advised that it has a good case to canvass and is more than likely
to succeed in the present writ petition. The Petitioner humbly
submits that to reject the said Credit without showing ‘evasion of
tax’ would render the entire investigation without authority of law.

69.[68.] The Petitioner further submits that the impugned

intimation is issued without jurisdiction and goes into root of the
matter
70.[69.] Thus, during the pendency of this writ petition before this
Hon’ble Court, it is humbly submitted that Respondent No. 3 be
directed to defer adjudication of the Impugned Notice
71.[70.] The Petitioner humbly submits that if the interim orders
sought were not granted by this Hon’ble Court, grave injustice
would be caused to it as it would be put to irreparable loss and
severe hardship, as Petitioners are left to reply to the Impugned
Notice which is illegal and in contravention of the law

72.[71.] The Petitioner thus humbly submits that it would,

therefore, be eminently desirable that this Hon’ble Court may be
pleased to grant the interim orders sought by the Petitioner. It is
humbly submitted that no loss or prejudice would be caused to the
Respondents if the said interim orders are granted by this Hon’ble
Court. The balance of convenience thus lies heavily in favour of the
Petitioner.

73.[72.] It is submitted that the present petition is filed within

limitation.

74.[73.] The Petitioner has paid appropriate court fee on this

petition.

75.[74.] There is no alternative or efficacious remedy available to

the Petitioner other than preferring the present petition.

76.[75.] The petition is filed within limitation and this Hon'ble Court
has jurisdiction to hear and entertain the present petition.
PRAYER

WHEREFORE it is humbly prayed that this Hon'ble Court may be pleased

to:
(i) Quash the Impugned Intimation dated 20.12.2023
(‘ANNEXURE G) for being without the authority of law and
completely without jurisdiction

(ii) Quash the Impugned Intimation dated 20.12.2023

(‘ANNEXURE G) for being premature and imminently likely to
cause irreparable prejudice if adjudication were to proceed as
the facts of the case are not considered

(iii) Read down Rule 42 in such manner that same is not applicable
to the facts of the present case.

(iv) 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.

INTERIM PRAYER

The Petitioner most respectfully prays that during the pendency of

this writ petition before this Hon’ble Court, this Hon’ble Court may
be pleased to:

(i) Restrain the Respondent No. 4 from proceeding with

adjudication in the matter of Impugned intimation dated
20.12.2023

(ii) Pass ad-interim ex-parte orders in terms of prayers (i) and (ii)
above; and

(iii) 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.

Place: Bengaluru

Date: Petitioner

ADDRESS FOR SERVICE:

BHAT & RAO, Advocates
No. 307, Richmond Towers,
12, Richmond Road, Bengaluru – 25.
E: arjun@arjunrao.in; Ph: (+91) 98805 08071.
 BEFORE THE HON’BLE HIGH COURT OF KARNATAKA
AT BENGALURU

W. P. No. / 2023 (T-RES)

BETWEEN:
M/s. Suresh Bhatia HUF …Petitioners

AND:
The Union of India and Ors. …Respondents

VERIFYING AFFIDAVIT

I, [-], Son of [-], Aged about [-] years, At: [-],hereby solemnly
affirm and state on oath as follows:

1. I am the [-]. I am aware of the facts and circumstances of

the present petition and I am authorised by the [-] to swear to this
affidavit.

2. I state that the averments made in the accompanying

petition from para nos. 1 to ___ are true and correct to the best of
my knowledge, belief and information.

3. I state that the annexures produced with the accompanying

petition from Annexure A to ____ are true copies of their
respective originals.

4. What is stated above is true and correct.

Identified by me: Deponent

(Advocate) “sworn to before me” (notary)

Place: Bengaluru

Date:
 BEFORE THE HON’BLE HIGH COURT OF KARNATAKA
AT BENGALURU

W. P. No. / 2023 (T-RES)

BETWEEN:
M/s. Suresh Bhatia HUF …Petitioners

AND:
The Union of India and Ors. …Respondents

VAKALATNAMA

I/We, M/s Suresh Bhatia HUF through Karta

Mr.___________, hereby appoint and retain, Mr. Arjun Rao,
Maitreyi Bhat, Ms. Aishwarya Prasad, Mr. Abhijeeth Suresh ,
Ms. Ishika Prabhakar and Mr. Raj Rishi Dutta, Advocates to
appear, act and plead for me/us in the above matter and to
conduct/prosecute and defend the same and all interlocutory or
miscellaneous proceedings connected with the same or with any
decree or orders passed therein, and also in proceedings for review
of judgment and for leave of appeal to Supreme Court of
compromise and obtain/return of any document filed therein, or to
receive any money which may be payable to me/us in the said
matter.

I/We hereby authorize him/them to my/our behalf to enter a

compromise in the above matter, to execute any decree/order
therein, to appeal from any decree/order therein and to appeal/to
act/to plead in appeal, or in any appeal, preferred by any other
party from any decree/order therein.

I/We further agree that if I/We fail to pay the fees agreed upon to
give instruction at all stages he/them is/are at liberty to retire from
the case recover all amounts due to him and retain all my monies
till such dues are paid.

Executed by me/us on this ___ day of November 2023 at

Bengaluru.

Petitioner
For M/s Suresh Bhatia HUF
Mr. ___________
Executant/s personally known to me and he/they has/have signed
in my presence.

Satisfied as to the identity of executant/s signature/s

Where the executant is illiterate, blind or unacquainted with the

language of Vakalath and has certified that the contents were
explained to the executant/s in my presence in English language
known to him who appeared to have perfectly understood the
same and signed his name made his mark in my presence.

Address for Service

BHAT & RAO, Advocates
307, Richmond Towers,
12, Richmond Road,
Bengaluru -560025
Ph: 9880508071
E: arjun@arjunrao.in

Accepted

Arjun Rao | KAR/851/2013 Maitreyi Bhat | KAR/2083/2014

Aishwarya Prasad | KAR/2296/2021

Advocates for the Petitioners

Place: Bengaluru
Dated:
 BEFORE THE HON’BLE HIGH COURT OF KARNATAKA
AT BENGALURU

IA No. ___ of 2023

IN
W. P. No. / 2023 (T-RES)

BETWEEN:
M/s. Suresh Bhatia HUF …Petitioners

AND:
The Union of India and Ors. …Respondents

INDEX

Sl. No. Document Page No(s).

1. IA No. ___ of 2023 for dispensation
with certified copies.
2. Affidavit in support of IA No. ____ of
2023.

Place: Bengaluru

Date: Advocate for the Petitioner

ADDRESS FOR SERVICE:

BHAT & RAO, Advocates
No. 307, Richmond Towers,
12, Richmond Road, Bengaluru – 25.
E: arjun@arjunrao.in; Ph: (+91) 98805 08071.
 BEFORE THE HON’BLE HIGH COURT OF KARNATAKA
AT BENGALURU

W. P. No. / 2023 (T-RES)

BETWEEN:
1.M/s. Suresh Bhatia HUF

A Hindu Undivided Family,

Having its registered office at: 4406, High Point IV, 45 Palac Road,
Bengaluru Urban – Karnataka - 560001
Represented herein by its Karta Mr. _________,
…Petitioner

AND
1.The Union of India

Represented herein by the Secretary,

Department of Revenue, Ministry of Finance
Government of India, North Block, New Delhi – 110 001

2.Central Board of Indirect Taxes and Customs

Represented herein by the Chairman

Department of Revenue, Ministry of Finance,
Government of India, North Block,
New Delhi – 110 001

3.Additional Director,

Directorate General of GST Intelligence,

Bengaluru Zonal Unit,
No. 112, S.P. Enclave, Adjacent to Karnataka Bank,
K.H. Road, Bengaluru, Karnataka -560027

4.Senior Intelligence Officer,

Directorate General of GST Intelligence,

Bengaluru Zonal Unit,
No. 112, S.P. Enclave, Adjacent to Karnataka Bank,
K.H. Road, Bengaluru, Karnataka -560027

…Respondents
INTERLOCUTORY APPLICATION UNDER ARTICLE 226 OF THE
CONSTITUTION OF INDIA, 1950 READ WITH SECTION 151
OF THE CODE OF CIVIL PROCEDURE, 1908.

For the reasons sworn to in the accompanying affidavit, it is

humbly prayed that this Hon'ble Court may be pleased to dispense
with the production of the certified copy of Annexure(s)
________________, in the interest of justice and equity.

Place: Bengaluru

Date: Advocate for the Petitioner

 BEFORE THE HON’BLE HIGH COURT OF KARNATAKA
AT BENGALURU

IA No. ___ of 2023

IN
W. P. No. / 2023 (T-RES)

BETWEEN:
M/s. Suresh Bhatia HUF …Petitioners

AND:
The Union of India and Ors. …Respondents

AFFIDAVIT

I, [-], Son of [-], Aged about [-] years, At: [-],hereby solemnly
affirm and state on oath as follows:

1. I am the [-]. I am aware of the facts and circumstances of

the present petition and I am authorised by the [-] to swear to this

affidavit.

2. I state that for the sake of brevity, the averments made in

the accompanying petition may kindly be read as part and parcel of
this affidavit.

3. I state that I have filed this application seeking dispensation

of certified copies as described in the accompanying application. I
state the reason behind seeking dispensation is that I am in the
process of obtaining the said certified copies. However, there is
urgency in the present petition and as such I have filed the best
available copies of the said annexures as available with me.
4. I undertake to produce the certified copies of the said
annexures as and when the same are available with me and as
directed by this Hon'ble Court.

5. The present application is filed bona fide. I will be put to

grave harm and prejudice if this application is now allowed. Per
contra, no harm or prejudice will be caused to the Respondents if
this application is allowed.

6. What is stated above is true and correct.

Identified by me: Deponent

(Advocate) “sworn to before me” (notary)

Place: Bengaluru

Date: