The Karnataka High Court recently addressed a case involving M/s. Vigneshwara Transport Company, which was accused of GST evasion through fake invoices and manipulation of e-way bills across several states. The company contested a show cause notice, arguing that the evidence supporting it was invalid due to being collected by officers allegedly lacking jurisdiction. A Single Judge initially quashed the notice, ordered a refund of ₹50 lakhs, and mandated the return of seized materials. However, the Revenue appealed, asserting that the notice was issued by a competent authority and based on evidence from multiple sources.

The central issue was whether a show cause notice remains valid if it relies on evidence gathered by officers purportedly without jurisdiction or through contentious search proceedings. The court ruled that proceedings under Section 74 of the CGST Act are independent and not contingent on the legitimacy of a search under Section 67. It emphasized that relevant evidence is admissible even if obtained through irregular or jurisdictionally disputed searches, aligning with established legal principles.

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The court further noted that GST authorities are permitted to use materials collected by other commissionerates, particularly in cases of multi-state tax evasion. It concluded that interference at the show cause notice stage is premature, as the assessee has the opportunity to challenge the evidence during the adjudication process.