2026 (1) TMI 1499 - HC - GST

GST levy on educational activities: order-in-original set aside and matter remitted for fresh adjudication allowing reply

Order-in-original passed during pendency of an interim order in a GST dispute concerning levy on educational activities is set aside, and the matter is ... Validity of show cause notice - GST levy on educational activities - compliance with interim orders - remand for re-adjudication - order-in-original - HELD THAT:- It is the case of the petitioner that despite such interim order being passed, the authorities have proceeded to adjudicate and pass an order-in-original, a copy of which is produced along with a memo. Taking note that the order-in-original is passed during the pendency of the present petition in which there was an interim order passed on 23.12.2025, it would be appropriate to set aside the order-in-original and accordingly, the order-in-original dated 31.12.2025 passed by the Assistant Commissioner, West Division-3 is set aside and the matter is remitted to the stage of reply to the show cause notice. The petitioner is permitted to make out reply and the respondent - authorities while proceeding further are also directed to consider the legal position as asserted by the petitioner in the present writ petition and as may be placed before the authority by way of reply. Accordingly petition is disposed of. All contentions on merits are kept open. Issues: (i) Whether the order-in-original dated 31.12.2025 passed during pendency of an interim order should be set aside for violation of the interim order; (ii) Whether the proceedings raising GST demand require re-adjudication in view of the contention that the activity is an 'educational activity' and therefore outside levy.Issue (i): Whether the order-in-original dated 31.12.2025 passed during the pendency of the writ petition and interim order should be set aside for violation of the interim order.Analysis: The impugned order-in-original was passed while an interim order restrained the respondents from taking coercive steps. The order-in-original is ex-parte and was produced before the Court. The Court considered the fact of the interim order and the subsequent adjudication during its pendency and found that the impugned order cannot stand in those circumstances.Conclusion: The order-in-original dated 31.12.2025 is set aside for having been passed during the pendency of the interim order.Issue (ii): Whether the matter should be remitted for re-adjudication taking into account the petitioners contention that the activity constitutes 'educational activity' and is not subject to levy.Analysis: The petitioner raised a substantive legal contention that the activity falls within educational activity exemption, relying on a prior Division Bench decision and its dismissal in SLP by the Apex Court. Given the legal contention and the ex-parte nature of the impugned adjudication, the appropriate course is to remit the proceedings to the authority to consider the reply to the show cause notice and the legal position asserted by the petitioner and to decide the matter in accordance with law.Conclusion: The proceedings are remitted to the authority to re-adjudicate from the stage of reply to the show cause notice, with directions to consider the petitioners contention that the activity is an educational activity and to dispose of the proceedings in accordance with law.Final Conclusion: The impugned adjudicatory order is set aside and the matter is remitted for fresh adjudication, permitting the petitioner to file a reply and requiring the authority to consider the legal position regarding educational activity in accordance with law.Ratio Decidendi: An adjudicatory order passed in violation of an interim injunction must be set aside and, where a substantive legal contention (here, that the activity is educational and not leviable) is raised, the matter should be remitted for re-adjudication so the authority can consider the contention and decide in accordance with law.