Safiya Malik

The Uttarakhand High Court Division Bench comprising Chief Justice G. Narendar and Justice Alok Mahra held that coercive action initiated by the department under the Goods and Services Tax Act, 2017, in the absence of any pre-intimation notice, is not legally permissible. The Court recorded that the object of the GST regime is to ensure tax compliance, not to inflict business loss or livelihood disruption. It was further directed that any future action must strictly adhere to the provisions of the Act. An interim order was passed in favour of the petitioner, staying the coercive measures taken by the department.

The matter pertains to three writ petitions—WPMB Nos. 47 of 2025, 48 of 2025, and 95 of 2025—heard together by the Uttarakhand High Court. The petitioner challenged coercive actions taken by the authorities under the Goods and Services Tax Act, 2017, alleging that the measures were taken without issuing a prior notice as mandated under the law. The pleadings indicated that the department had acted in a manner contrary to statutory procedure by initiating measures akin to penalty before providing the petitioner with an opportunity to respond.

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Counsel for the petitioner, Mr. Rakesh Prasad Singh and Mr. Kanti Ram Sharma, submitted that the authorities took punitive action without complying with the mandatory procedural safeguards prescribed under the GST Act. It was argued that such action, undertaken in the absence of a show cause notice or pre-intimation, violates the principle of natural justice and renders the departmental proceedings illegal.

On the other hand, the State was represented by Ms. Puja Banga, Brief Holder, who sought time to file a counter-affidavit. No specific justification from the department was recorded at this stage with regard to the pre-notice coercive steps complained of.

The matter was taken up for preliminary hearing on 28 March 2025. After considering the submissions and the available record, the Division Bench examined whether the departmental conduct aligned with the legislative scheme and the object of the Goods and Services Tax regime.

The Court recorded strong reservations against the manner in which the department had proceeded. It noted that the conduct of the department, as placed on record, was “startling and shocking.” The Division Bench stated:
“It is not known and incomprehensible as to which provision of law permits the Department to take deterrent and coercive action, even prior to issuance of pre-intimation notice.”

The Bench recorded that the nature of the action undertaken by the authorities bore resemblance to imposition of a penalty prior to the initiation of due process. The Court observed:
“The act complained of is akin to imposition of punishment and then conducting the trial.”

The Court commented critically on the overall approach of the department. It recorded:
“The conduct of the Department is deplorable.”

The Bench expressed that the purpose of the GST enactment was not to undermine business operations or cause their failure. It observed:
“The aim and objective of the GST Act, in our considered opinion, is not to destroy businesses or ensure their closures.”

The judgment proceeded to define the purpose behind the implementation of the Goods and Services Tax Act. The Court stated:
“The GST regime was brought-in with the objective of ensuring tax compliances, and not with the intent or objective of ensuring loss of livelihoods.”

The Bench also noted that adherence to the principles of fairness and lawful procedure was crucial for the business ecosystem. It remarked:
“The growth of businesses and sustenance of businesses is vital for employment generation and growth of the Nation.”

Addressing the department, the Court remarked:
“If the Department can bear this in mind and act in consonance with the stated objectives of the Act, it would be rendering yeomen service to the business community.”

The Court further recorded that such coercive actions without statutory backing reveal a certain administrative approach, observing:
“Such actions reflect a mind set, which we do not wish to name here.”

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Upon perusal of the material and submissions made by counsel, the Court issued interim relief in favour of the petitioner. The Bench passed the following direction:

“In that view, there shall be an interim order, as prayed for, and any action shall be duly in compliance with the provisions of the GST Act.”

The matter was directed to be listed again on 29 April 2025. The Court also permitted the State to file a counter-affidavit by the next date of hearing.

Advocates Representing the Parties

For the Petitioners: Rakesh Prasad Singh, Advocate; Kanti Ram Sharma, Advocate

For the Respondents: Puja Banga, Brief Holder

Case Title: WPMB No. 47 of 2025, WPMB No. 48 of 2025, and WPMB No. 95 of 2025

Case Number: WPMB No. 47 of 2025

Bench: Chief Justice G. Narendar and Justice Alok Mahra

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