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2025 Supreme(Online)(J&K) 1234

IN THE HIGH COURT OF JAMMU AND KASHMIR AND LADAKH AT SRINAGAR
MR. SANJEEV KUMAR, MR. SANJAY PARIHAR, JJ
M/s New Gee Enn & Sons – Appellant
Versus
Union of India – Respondent
WP(C) 1938/2024 | WP (C) No. 1959/2024 | WP(C) 1961/2024 | WP(C) 1962/2024 | WP(C) 2003/2024 | WP(C) 2008/2024 | WP(C) 2009/2024 | WP(C) 2010/2024 | WP(C) 2011/2024 | WP(C) 2071/2024 | WP(C) 2072/2024 | WP(C) 2073/2024 | WP(C) 2074/2024 | WP(C) 2075/2024 | WP(C) 2076/2024 | WP (C) No. 475/2025 | WP(C) 531/2025 | WP(C) 532/2025 | WP(C) 533/2025 | WP(C) 617/2025 | WP(C) 2087/2025 | WP(C) 2089/2025 | WP(C) 2477/2025 | WP(C) 2478/2025 | WP(C) 2479/2025 | WP(C) 2480/2025

Advocates:
For the Appellants/Petitioners: Mr. S. F. Qadiri, Sr. Adv., Mr. Numan Zargar, Adv., Ms Snober Sameer, Adv., Mr. Sikander Hayat Khan, Adv.
For the Respondents: Mr Tahir Majid Shamsi, DSGI, Ms Rehana Qayoom, Adv., Mr. Waseem Gul, GA, Mr. Mohd Younus Hafiz, AC, Ms. Nowhabar Khan, AC

Cross-LoC trade is classified as intra-state under GST laws, making it subject to taxation despite challenges regarding jurisdiction and limitation; alternative legal remedies do not preclude writ jurisdiction.

Headnote:(A) Central Goods and Services Tax Act, 2017 - Section 74(1) - J&K Goods and Services Act, 2017 - Challenge to show cause notices issued under Section 74(1) regarding GST for cross-LoC trade, framed within statutory timelines and alleging suppression of facts by the petitioners - Court examined issues of intra-state trade classification, jurisdictional validity of notices, statutory limitation, and availability of alternative remedies - Both Acts deem cross-LoC trade as intra-state and thus taxable under GST - Notices not barred by limitation and permissible to be grouped for different financial years (Paras 1-53).

Facts of the case:
The petitioners contested show cause notices from CGST authorities regarding unpaid GST in cross-LoC barter trade, asserting jurisdictional invalidity due to ongoing alternative remedies, claiming notices were issued beyond statutory limits, and addressing the classification of the trade as intra-state vs. international (Para 2).

Findings of Court:
The notices were upheld as within jurisdiction, issued on proper grounds, and not barred by limitation - The nature of cross-LoC trade characterized as intra-state, affirming compliance obligations under the GST regime (Paras 46-52).

Issues: Main issues included: legality of jurisdiction of notices; classification of cross-LoC trade; statutory limitations; and the grouping of notices pertaining to multiple financial years (Paras 16-40).

Ratio Decidendi: The court reiterated that the classification of cross-LoC trade as intra-state aligns with statutory definitions, confirming that the notices adhered to procedural demands. The availability of alternative remedies does not bar the writ petitions; however, these petitions lack merit and are thus dismissed (Paras 43-49).

Result: Writ petitions dismissed, petitioners directed to respond to notices in stipulated timeframe.

Table of Content
1. petitioners challenge show cause notices. (Para 1 , 2)
2. background facts of cross-loc trade. (Para 3 , 4 , 5 , 6)
3. gst liability of petitioners in cross-loc trade. (Para 7 , 8 , 9)
4. arguments on jurisdiction of show cause notices. (Para 10 , 11)
5. counterarguments regarding jurisdiction. (Para 12 , 13 , 14 , 15)
6. determining nature of cross-loc trade. (Para 16 , 17 , 18 , 19 , 20 , 21 , 22 , 23)
7. differences between section 73 and section 74. (Para 24 , 25 , 26 , 27 , 28)
8. impugned notice analysis under section 74. (Para 29 , 30 , 31)
9. limitation aspects of the impugned notice. (Para 32 , 33 , 34 , 35 , 36)
10. bunching of show cause notices is permissible. (Para 37 , 38 , 39 , 40 , 41)
11. availability of statutory remedy under cgst act. (Para 42 , 43 , 44)
12. conclusions regarding maintainability of petitions. (Para 45 , 46 , 47)
13. final orders of the court. (Para 48 , 49 , 50 , 51 , 52 , 53)

JUDGMENT

Per Sanjeev Kumar, J

1. In this batch of petitions, the petitioners invoke the extraordinary writ jurisdiction vested in this Court under Article 226 of the Constitution of India to throw challenge to the show cause notices issued to them by the Superintendent, CGST and CX Range-I, Srinagar, under Section 74 (1) of the Central Goods and Services Tax Act, 2017 [“CGST Act of 2017”], read with the J&K Goods and Services Act, 2017 [“J&K GST Act of 2017”).

2. In some of the petitions, the competent authority of the respondents has confirmed the demand. Admittedly, the petitioners, having statutory remedies under both the legislations, have chosen to invoke the writ jurisdiction of this Court on the ground that the impugned notices are without jurisdiction and, therefore, availability of alternative statutory remedy is no bar to the entertaining of the writ petitions. It is in this background, the learned counsel for the petitioners has made his submissions to persuade us to hold that the show cause notices issued by the respondents are without jurisdiction and, therefore, not sustainable in law.

3. Before we advert to the rival contentions of the parties and the grounds of challenge to the impugned show cause notices urged by Mr. Faisal Qadri, learned Senior Counsel, we deem it appropriate to notice few background facts leading to the issuance of show cause notices and consequent filing of these petitions.

4. In the year 2008, with a view to improve relations through undertaking, various Confidence Building Measures, the Governments of two countries, i.e., the Union of India and Pakistan, took a decision to allow a free LoC cross trade between them on certain terms and conditions. This decision, so arrived at between the two countries, ultimately culminated into issuance of notification dated 20^th October, 2008, by the Government of India.

5. From perusal of notification dated 20^th October, 2008, it would transpire that the trade was only cross LoC trade on Srinagar-Muzaffarabad and Poonch-Rawalakote routes. The term “Cross-LoC trade” clearly conveyed that the trade was permitted only between divided parts of the State of Jammu and Kashmir and was one of the Confidence Building Measures aimed at benefiting the local economy on both sides of LoC. The trade was regulated by the Standard Operating Procedure (SOP) issued by the Government of India, Ministry of Home Affairs (J&K Division). Annexure-A of the SOP listed 21 items to be traded from Islamabad-Uri to Chakoti (PoK) and from Chakkan-da-Bagh (Poonch) to Rawalakote (PoK). Annexure-B of the SOP listed 21 items to be traded from Chakoti (PoK) to 4 Islamabad-Uri and from Rawalakot (PoK) to Chakkan-da-Bagh (Poonch) as mutually agreed by India and Pakistan, it was a barter trade and there was no exchange of currency.

6. At the relevant point of time, when this cross-LoC trade commenced, the intra-state sales tax was governed by the Jammu and Kashmir Value Added Taxes Act, 2005 [“the VAT Act, 2005”]. Section 55 of the VAT Act, 2005, which came to be amended on 7th Feb

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2025 Supreme(Online)(J&K) 1234

Cross-LoC trade is classified as intra-state under GST laws, making it subject to taxation despite challenges regarding jurisdiction and limitation; alternative legal remedies do not preclude writ jurisdiction.

Cases Referred (1)