Assessment Order Set Aside for Non-Consideration of Key Objections and SEZ Invoices

Case Details
Case Name: Sodex India Services Private Limited v. Union of India
Court: High Court of Andhra Pradesh
Petition Number: WP No. 6869/2025
Date of Judgement: 16.04.2025
Category of Dispute: Assessment, Input Tax Credit, SEZ Supplies, Penal Provisions
Relevant Sections: Sections 20, 50, 74, 122(2), 125 of CGST Act, 2017; Rule 45 of CGST Rules

🧾 Facts of the Case (Paras 1–7)

1. The petitioner is registered under GST in Andhra Pradesh and supplies taxable services including catering and housekeeping services.

2. A show-cause notice dated 27.07.2024 was issued for FY July 2017 to March 2021, alleging:

   • Non-payment of tax on SEZ supplies for lack of certified endorsements.

   • Short-payment of tax under SAC 9963 (catering services).

   • Incorrect ITC claims via Input Service Distributor not conforming to Section 20.

   • Differences between GST returns and trial balance turnovers.

3. Petitioner submitted replies on 18.10.2024 and 06.11.2024.

4. An Order-in-Original dated 05.02.2025 confirmed all allegations.

5. Petitioner challenged this order, alleging improper appreciation of objections and reliance on incomplete Trial Balances that included turnover from multiple states (not just Andhra Pradesh).

6. They also argued that CA-certified accounts were selectively accepted/rejected without reasoning.

7. Regarding SEZ supplies, the petitioner submitted that certified endorsements were provided (post-implementation issues existed in 2017–18), but were ignored by the officer.

❓Question(s) in Consideration (Paras 4, 6, 7, 10)

• Whether the adjudicating authority had erred in clubbing multi-state turnovers as intra-state (AP) turnover based on incomplete Trial Balances?

• Whether the officer failed to consider duly endorsed SEZ invoices and objections on SAC 9963 classification?

• Was invocation of penalty provisions under Sections 74, 122(2), and 125 justified in absence of fraud, suppression, or willful misstatement?

🧠 Observations of the Court (Paras 10–12)

• The 3rd respondent did not address the issue of whether the Trial Balance pertained only to Andhra Pradesh or included all-India turnover.

• There was non-consideration of SEZ invoice endorsements, which were available for at least some period.

• The objections were partly or entirely ignored, leading to failure of principles of natural justice.

• The invocation of penal provisions without first establishing fraud or suppression was premature and required reconsideration.

⚖️ Judgement of the Court (Paras 12–14)

• The Court set aside the Order-in-Original dated 05.02.2025 and remanded the matter back to the 3rd respondent.

• Directed fresh adjudication after considering:

  • Properly segregated turnover data.

  • Submitted SEZ invoices with endorsements.

  • Legitimacy of invoking penalty provisions.

• Opportunity of hearing to be provided to the petitioner.

• Limitation period to exclude time between the impugned order and receipt of court order.

✅ Between Fine Lines

• GST assessments must consider objections and evidence provided.

• Clubbing of multi-state turnovers without segregation is invalid.

• Endorsement norms for SEZ supplies during transition phase (2017–18) need contextual understanding.

• Penalty provisions cannot be invoked without establishing mens rea.

• Courts uphold procedural fairness in GST adjudications.

📚 Summary of Referred Cases

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