Kabeer Reality Private Limited VS The Union of India

The petitioner, Kabeer Reality Private Limited, is a registered company under the Companies Act, 1956. They have brought forth this petition in response to an order/notice dated 08.07.2019 issued by the Deputy Commissioner, CGST & Central Excise, Division – V, Indore. This notice was directed to the tenants of the petitioner, initiating recovery proceedings against them.

Kabeer Reality Private Limited asserts that they are the rightful owners of a commercial building located at 2, Kibe Compound, Chawani, Indore. They argue that the notice issued by the Deputy Commissioner is unjust and improper. The company feels aggrieved by this action and seeks redress through the present petition.

The crux of the petitioner’s argument revolves around the ownership rights of the commercial building in question. They claim to have legal authority over the property and contest the validity of the notice issued to their tenants. By bringing this petition before the court, Kabeer Reality Private Limited aims to challenge the legality and fairness of the recovery proceedings initiated against their tenants.

In essence, the petitioner alleges that the notice issued by the Deputy Commissioner is erroneous and infringes upon their rights as the lawful owners of the commercial building. They seek relief from the court to rectify this situation and prevent any further unjust actions against them or their tenants. 

The petitioner, a registered entity under the Central Goods & Service Tax Act, 2017, engages in the business of renting immovable property and providing associated services. In the past, a recovery order was issued on 03.10.2018 by respondent No.2, directing the petitioner’s tenants to deposit rent with the State Exchequer due to service tax arrears. However, after clearing all dues and penalties, the notice was withdrawn on 09.07.2019.

Recently, respondent No.1 issued another notice under Section 79(1)(c) of the Act of 2017 to the petitioner’s tenants, initiating recovery proceedings amounting to Rs.44,43,804 for taxes, cess, interest, etc. The petitioner responded on 15.07.2019, asserting that the notice/order dated 08.07.2019 is inherently illegal and has been wrongly issued.

The petitioner/company in this legal case has presented several arguments against an order issued by the respondents, citing violations of the provisions laid down in the Act of 2017. They contend that respondent No.2 did not adhere to the prescribed procedure for demand and recovery as outlined in the Act. Specifically, they argue that without the determination of the tax payable by the taxable person, recovery actions, as outlined in Section 79(1)(c) of the Act, should not have been initiated.

Furthermore, the petitioner asserts that without a formal determination of tax liability under Section 73 of the Act, no recovery action should have been taken against them, as they did not receive any prior notice of demand from the respondents.

Additionally, the petitioner claims that the actions of the respondents are in direct violation of Section 79 of the Act, thus warranting the annulment of the impugned order.

Beyond these primary contentions, the petitioner raises further objections, arguing that they were not afforded an opportunity for a hearing before the impugned order was issued. Consequently, they argue that any adjustment of rent towards tax dues is unjustified.

In sum, the petitioner/company seeks to invalidate the order issued by the respondents on the grounds of procedural irregularities and violations of the statutory provisions outlined in the Act of 2017.