Case Details: Raghuvansh Agro Farms Ltd. vs. State of U.P. (2026) 38 Centax 53 (All.)
Judiciary and Counsel Details
- Piyush Agrawal, J.
- Shri Aditya Pandey, for the Petitioner.
Facts of the Case
The petitioner, engaged in the business of supply of agricultural goods and areca nuts, was subjected to a survey pursuant to which proceedings under Section 74 of the Uttar Pradesh GST Act were initiated by the State GST authority alleging circular trading and wrongful availment of input tax credit. The petitioner submitted a detailed reply along with documents contending that all purchases and sales were duly reflected in books of account and GSTRs, supported by banking records, tax invoices, e-way bills, bilty, and evidence of actual movement of goods, and further raised a specific objection that the State GST authority lacked jurisdiction as the petitioner fell within the Central GST administration in absence of any cross-empowerment notification. It was also contended that despite these submissions, the impugned order was passed without granting any opportunity of personal hearing and without recording any finding of fraud, wilful misstatement, or suppression of facts as required under Section 74. The matter was accordingly placed before the High Court.
High Court Held
The High Court held that initiation and adjudication of proceedings under Section 74 mandatorily require recording of specific reasons supported by evidence to establish fraud, wilful misstatement, or suppression of facts, which were absent both in the show cause notice and in the impugned order. The Court held that the State GST authority failed to demonstrate jurisdiction to initiate proceedings, particularly when a clear objection regarding lack of jurisdiction was raised and no material or notification evidencing cross-empowerment was placed on record. It was further held that where transactions were duly reflected on the GST portal, supported by banking channels, invoices, e-way bills, and evidence of physical movement of goods, survey-based allegations of circular trading could not be sustained by brushing aside such material evidence. Accordingly, the High Court held the impugned order to be unsustainable in law and quashed the same.
List of Cases Citied
- Ajnara Realtech Ltd. v. State of Uttar Pradesh — (2025) 28 Centax 373 (All.) — Referred [Paras 16, 24]
- HCL Infotech Ltd. v. Commissioner, Commercial Tax — (2024) 23 Centax 71 (All.) = 2024 (90) G.S.T.L. 233 (All.) — Referred [Paras 16, 23]
- Khurja Scrap Trading Company v. Additional Commissioner Grade-2 (Appeal) — (2025) 34 Centax 280 (All.) = 2025 (102) G.S.T.L. 107 (All.) — Followed [Paras 33, 34]
- Safecon Lifescience (P.) Ltd. v. Additional Commissioner Grade 2 — (2025) 35 Centax 152 (All.) = 2025 (103) G.S.T.L. 44 (All.) — Followed [Paras 32, 34]
- State of Karnataka v. Ecom Gill Coffee Trading (P.) Ltd. — (2023) 4 Centax 223 (S.C.) = 2023 (72) G.S.T.L. 134 (S.C.) — Distinguished [Paras 18, 30]
- Vadilal Enterprises Limited v. State of UP — (2025) 32 Centax 90 (All.) — Referred [Paras 16, 24]
