The Gujarat High Court has granted ad-interim protection to a company challenging proceedings under Section 74 of the Central Goods and Services Tax Act, 2017, after it contended that the department had issued a show cause notice despite an unchallenged advance ruling concerning its coal handling and distribution services and input tax credit.

The Division Bench of Justice Sangeeta K. Vishen and Justice P. M. Raval permitted the authorities to continue the proceedings but directed that no final order be passed without the Court’s prior permission.

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The petitioner/assessee challenged the bunching of the notice. The Court issued notice to the respondents, returnable on January 21, 2027.

Appearing for the petitioner, advocate Avinash Poddar submitted that the company had approached the Authority for Advance Ruling under Section 97 of the CGST Act to obtain clarity on the applicable GST rate for separately contracted coal handling and distribution services and the utilisation of input tax credit.

According to the submissions recorded in the High Court’s order, the authority ruled on July 19, 2024, that coal handling and distribution services provided under a separate work order constituted an independent supply of services taxable at 18% GST.

The ruling also held that input tax credit was admissible and could be utilised accordingly, subject to fulfilment of the conditions prescribed under Section 16 of the CGST Act.

The petitioner submitted that the respondent authorities had accepted the advance ruling and had not challenged it.

Relying on Section 103 of the CGST Act, counsel submitted that the advance ruling was binding on the petitioner. Against this background, the company questioned the authorities’ decision to invoke Section 74 and issue a show cause notice.

The challenge places before the Court the petitioner’s grievance that proceedings had been initiated despite an existing advance ruling addressing the GST treatment of the services and the availability and utilisation of credit.

However, the High Court’s brief order does not reproduce the show cause notice, quantify any proposed demand, or detail the allegations on which Section 74 was invoked. It also does not finally determine whether the notice is inconsistent with the advance ruling.

The petitioner further submitted that the authorities had already conducted a comprehensive audit for the same year without raising any objection.

This was placed before the Court as an additional ground questioning the subsequent proceedings. The order records the submission but does not make a final finding on the legal effect of the earlier audit.

At the outset, counsel also stated that the petition involved the issue of bunching of the notice. The order does not identify the periods covered by the notice or adjudicate that issue.

Granting ad-interim relief, the Bench stated: “However, no final order shall be passed without the prior permission of this Court.”

The direction allows the authorities to continue the proceedings while restricting their ability to conclude them through a final order unless the High Court first grants permission.

The Court has neither quashed the show cause notice nor finally decided the petitioner’s challenge concerning the advance ruling, the earlier audit, or the bunching of the notice. These issues remain open for consideration in the pending petition.

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