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October 13, 2023

Challenging Tax Authority’s Reach: Kishore-Kumar Arora vs. Union of India & Anr.

Challenging Tax Authority’s Reach: Kishore-Kumar Arora vs. Union of India & Anr.


In this legal saga, Kishore-Kumar Arora, the petitioner, takes on the Union of India, contesting the jurisdiction of a “proper officer” and the legitimacy of a show cause notice. This case uncovers the pivotal concept of the taxable turnover threshold and the repercussions of crossing it.

Case Backstory:

Kishore-Kumar Arora deals in tobacco products and found himself in the crosshairs of a show cause notice from a “proper officer.” Acting on his accountant’s advice, Arora paid the specified amount, but later decided to challenge it in a writ petition. The heart of the matter is whether the proper officer had the rightful authority and whether the actions taken were valid.

The Core Issue:

 Can a notice issued by a proper officer be considered valid if the officer overstepped their jurisdiction?


  • The petitioner argues that records clearly indicate that, even according to the proper officer, the taxable turnover of the petitioner during the relevant period was Rs. 15,28,468.
  • Furthermore, the petitioner claims that their chartered accountant gave them incorrect advice, which led to an unnecessary payment of Rs. 18,69,400, even though their taxable turnover did not warrant such taxation.
  • The petitioner also insists that the proper officer acted without the necessary jurisdiction or legal authority by confiscating tobacco products and imposing a hefty penalty.
  • The proper officer had no authority to take action against the petitioner since their taxable turnover was well below the Rs. 20,00,000 threshold, as evident from the documents provided by the petitioner.
  • On the department’s side, they acknowledge that the petitioner has been in business since June 2018. They also mention finding a substantial amount of tobacco products at the petitioner’s place of business, which raised questions about invoices and bills. The petitioner explained that the goods were purchased in cash from a certain Mr. Raju, whose contact information was provided.

Observation and Verdict:

  • The court observed that the department’s case relied heavily on oral conversations with the petitioner and didn’t show any verification of Mr. Raju, a critical source for the petitioner’s supplies. The counter affidavit by the department didn’t mention Mr. Raju, a key element in their argument.
  • The court concluded that the taxable turnover of Rs. 15,48,468 was indeed accurate and well below the Rs. 20,00,000 threshold for tobacco products. Therefore, the department had no jurisdiction to issue the disputed show cause notice and orders.
  • All the disputed documents, including the show cause notice, Order-in-Original, and Order-in-Appeal, were set aside. The court ordered the department to refund the petitioner’s deposited amount of Rs. 18,69,400 with simple interest at 6% per annum, starting from the date of deposit until the refund.
  • This refund must be expedited, to be completed within two weeks from the date of this verdict.
  • While the court declined any further relief, it granted the petitioner the option to pursue any legal action deemed necessary.

In Conclusion:

This case underscores the importance of adhering to jurisdictional boundaries. It reveals a situation where an overzealous proper officer acted outside their authority. The lesson here is that power should be exercised judiciously, not arbitrarily.

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