Jammu & Kashmir High Court – Srinagar Bench
M/S Awan Traders And Ors vs Union Of India And Ors on 11 March, 2026
Author: Sindhu Sharma
Bench: Sindhu Sharma
S. No. 48
Suppl. Cause List
IN THE HIGH COURT OF JAMMU & KASHMIR AND LADAKH
AT SRINAGAR
WP(C) No. 2092/2025
CM No. 5531/2025
M/s Awan Traders and Ors. ...Appellant/Petitioner(s)
Through: Mr. L. A. Latief, Advocate
Vs.
Union of India and Ors. ...Respondent(s)
Through: Mr. T. M. Shamsi, DSGI with Ms. Rehana Qayoom, Adv.
CORAM:
HON'BLE MS JUSTICE SINDHU SHARMA, JUDGE
HON'BLE MR JUSTICE SHAHZAD AZEEM, JUDGE
ORDER
11.03.2026
01. In the instant petition, the petitioners invoke the extraordinary writ
jurisdiction of this Court under Article 226 of the Constitution of
India to challenge the show cause notices issued by the
Superintendent, CGST and CX Range-I, Srinagar, under Section 74(1)
of the Central Goods and Services Tax Act, 2017 (“CGST Act“), read
with the J&K Goods and Services Tax Act, 2017 (“J&K GST Act”).
02. Prior to considering rival contentions of the parties and the grounds of
challenge to the impugned show cause notices, it would be
appropriate to notice certain background facts which led to issuance of
show cause notices and consequently filing of instant petition.
03. In 2008, Ministry of Home Affairs, Government of India, issued a
Notification NO.13015/17/2007-k.II dated 20th October 2008, vide
which certain standing operating procedure was laid for cross LOC
Trade and the same was governed by J&K Value Added Taxes Act,
2005. Section 55 thereof, which was amended on 7 th February 2012,
provided that cross LoC Trade would be considered as a zero-rated
sale and, therefore, the cross LOC Trade was carried by petitioners
and other traders without payment of any sale or purchase tax.
04. In 2017, the CGST Act, 2017 and the J&K GST Act, 2017, came into
being, which, as is stated by petitioners, also did not contain any
provision equivalent to Section 55 of the erstwhile VAT Act and
resultantly, the petitioners continued to treat cross LoC Trade as zero-
rated, omitting these transactions from their returns and failing to pay
GST for the financial years 2017-2018 and 2018-2019.
05. Directorate General of GST Intelligence (DGGI), upon receipt of
specific information, initiated investigation as to whether GST was
paid on outward supplies to and inward supplies from PoK during
cross LOC Trade.
06. The investigation revealed substantial trade volumes that had not been
accounted for in the petitioners’ tax returns. Consequently, the
authorities issued Show Cause Notices (SCN) under Section 74(1) of
the CGST Act, 2017. Instead of replying these notices, the petitioners
are challenging them before this Court under Article 226 of the
Constitution on various grounds including lack of jurisdiction.
07. It is pertinent to mention here that the remedy available to petitioners
vis-Ã -vis impugned demand/show cause notices is to respond to the
same by filing reply. The present writ petition against such
demand/show cause notice under Section 74(1) of CGST Act, read
with J&K GST Act, is premature and liable to be dismissed. In this
regard reliance is being had to the judgement dated November 27,
2025 passed by the Division Bench of this Court in a bunch of writ
petitions with lead case, being WP(C) no.1938/2024 titled as M/s New
Gee Enn & Sons vs. Union of India, by which the controversy similar
to the present case, has been set at rest and it has been held that
remedy for aggrieved person is to file reply, submit requisite material
and contest such demand/show cause notices on merits and if, after
consideration of such reply, the officer concerned passes an order
confirming demand in terms of Subsection (9) of Section 74 of CGST
Act, the aggrieved shall have a remedy of appeal.
08. This petition is dismissed on the same analogy, i.e. of being premature
and also because the petitioners have an equally efficacious
alternative remedy under the statute.
09. We also issue the following directions as already passed in WP(C)
No. 1938/2024.
(i) Where the petitioners have not yet filed a reply to the
show cause notice issued under Section 74(1) of the
CGST Act of 2017, they shall do so within six weeks
from today. The proceedings initiated under Section
74(1) shall be taken to their logical conclusion by the
proper officer within three months of receiving the reply.
(ii) Where a final order under Section 74(9) confirming the
demand has already been passed, the petitioners shall
have three months from today to avail themselves of the
appellate remedy under Section 107 of the CGST Act of
2017.
10. We further clarify that anything said by us in the order hereinabove in
respect of merits of the controversy shall not be taken as an expression
of final opinion on the matter and the proper authority or the appellate
authority, as the case may be, shall be free to adjudicate the matter on
its merits independently of the prima facie view we have taken on the
merits of the case. The legal questions determined, however, shall be
binding on the parties.
(SHAHZAD AZEEM) (SINDHU SHARMA)
JUDGE JUDGE
SRINAGAR
11.03.2026
Manzoor
Manzoor Ul Hassan Dar
I attest to the accuracy and
authenticity of this document
Srinagar
06.04.2026 12.08