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IN THE HIGH COURT OF GUJARAT AT AHMEDABAD R/SPECIAL CIVIL APPLICATION NO. 17756 of 2023 FOR APPROVAL AND SIGNATURE:

HONOURABLE MR. JUSTICE A.S. SUPEHIA Sd/-

and HONOURABLE MS. JUSTICE VAIBHAVI D. NANAVATI Sd/-

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Approved for Reporting Yes No ✔

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NARODA ENVIRO PROJECTS LTD. & ANR.

Versus UNION OF INDIA & ORS.

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Appearance:

UCHIT N SHETH(7336) for the Petitioner(s) No. 1,2 MS HETVI H SANCHETI(5618) for the Respondent(s) No. 1,3,4,5 RULE SERVED for the Respondent(s) No. 2 ==========================================================

CORAM:HONOURABLE MR. JUSTICE A.S. SUPEHIA and HONOURABLE MS. JUSTICE VAIBHAVI D. NANAVATI Date : 02/09/2026

ORAL JUDGMENT

(PER : HONOURABLE MR. JUSTICE A.S. SUPEHIA)

1. In the present writ petition, the petitioners have prayed for quashing and setting aside the show-cause notice dated 05.09.2023 issued under section 74 of the Central Goods and Services Tax Act, 2017 read with section 74 of the Gujarat Goods and Services Tax Act, 2017 (for short “the GST Acts”).

BRIEF FACTS :

2. The petitioners preferred an application for registration under section 12AA of the Income Tax Act, 1961 (for short “the Act”) on 22.02.2006, which was rejected by the authorities.

Ultimately, the said action was subject matter of challenge before the Income Tax Appellate Tribunal, which remanded the matter for fresh consideration. Thereafter, the Director of Income Tax (Exemption), Ahmedabad granted registration to the petitioner No.1 under section 12AA of the Act w.e.f. 21.12.2005. Registration under section

25 of the Companies Act, 1956 was also granted.

3. It appears that an issue arose with regard to the status of the petitioner being questioned to the extent as to whether it carries its activities for charitable purposes defined under section 2(15) of the Act, which ultimately resulted into the proceedings before the Commissioner of Income Tax (Appeals), allowing the appeals in favor of the petitioner granting exemptions to the petitioner No.1, which were further subject matter of challenge before the Income Tax Appellate Tribunal (for short “the Tribunal”). The Tribunal rejected the appeals filed by the Department, which ultimately culminated into the tax appeals being Tax Appeal No.627 of 2015 and allied matters before this Court. By the judgment and order dated 29.07.2019, this Court held that the petitioner No.1 is engaged in charitable activity by way of preservation of environment. The issue thus, got concluded so far as the activities of the petitioners were concerned and no further challenge has been made. Civil Appeal No.8839 of 2022 filed by the Commissioner of Income Tax (Exemptions) against the judgment and order of this Court dated 29.07.2019 was disposed of on 30.01.2025 by the Apex Court in view of low tax effect.

4. After the introduction of the Goods and Services Tax (GST) regime w.e.f. 01.07.2017, the petitioners were under an impression that since the entity was duly registered under section 12AA of the Act and was engaged in undertaking the charitable activities, it claimed exemptions under the Notification No.12/2017-Central Tax (Rate) dated 28.06.2017 and did not pay the GST. As the petitioners were claiming exemptions, they were not entitled to claim Input Tax Credit under the GST Acts, which resulted into incurring losses. Thereafter, the petitioners obtained registration under the GST Acts and started paying Output Tax rather claiming exemptions, as they would be entitled for Input Tax Credit. From 13.05.2022, after obtaining registration under the GST, they stopped claiming exemption under the entry relating to the charitable activities.

5. It appears that on 23.11.2022, a search was conducted at the premises of the petitioner No.1, and it was alleged that the petitioners had erroneously not paid tax for the period pr