Per Dr Dhananjaya Y Chandrachud
1 Leave granted.
2 This appeal arises from a judgment of a Division Bench of the High Court of
Telangana dated 4 March 2020.
3 The High Court in the exercise of its writ jurisdiction under Article 226 of the
Constitution set aside the action of the appellants in collecting an amount of
Rs 4,16,447 from the respondent towards tax and penalty under the Central
Goods and Services Tax Act 2017 (CGST) and State Goods and Services Tax
Act (SGST) and directed a refund together with interest at the rate of 6% per
Signature Not Verified
Digitally signed by annum from 13 December 2019. A further direction has been issued to the Chetan Kumar
CA 5121/2021
Assistant Commissioner. Costs of Rs 25,000 have been imposed on the first
appellant, who was the first respondent before the High Court.
4 The respondent is a proprietary concern engaged in the business of iron and
steel and is registered under the Central Goods and Services Tax Act 2017
and has been allotted a GST code. The respondent purchased certain goods
from a dealer, JSW Steel Limited, Vidyanagar, Karnataka, under a tax invoice
dated 11 December 2019. The consignment of goods was being carried in a
truck bearing registration No KA 35 C 0141. While it was proceeding from the
State of Karnataka, it was intercepted on 12 December 2019 at 5.30 pm at
Jeedimetala. The tax invoice indicated that the goods were earmarked for
delivery at Balanagar, Telangana. The case of the appellants is that
Balanagar is situated between the State of Karnataka and Jeedimetala and
that no reasonable person would cross Balanagar and then turn around to go
back to the place of destination. The purchase value of the goods appeared
to be in the amount of Rs 11,14, 579 from the tax invoices.
5 The case of the revenue was that in the guise of an inter-State sale, the
respondent was attempting to sell the goods in the local market by evading
SGST and CGST. An order of detention was issued in Form GST MOV-06 on 12
December 2019 and a notice was served on the person in charge of the
conveyance. The respondent paid the tax and penalty, following which the
goods and the conveyance were released on 13 December 2019.
6 The respondent instituted writ proceedings under Article 226 of the CA 5121/2021
Constitution before the High Court in order to challenge the order of
detention dated 12 December 2019 and the notice which was issued under
Section 20 of the IGST Act 2017. A refund of tax was sought. A counter
affidavit was filed on behalf of the appellants before the High Court.
7 The High Court entertained the writ petition and ordered the refund of the
amount collected towards tax and penalty together with interest. The High
Court has observed that a mere possibility of a local sale would not clothe
the officials to take such an action and there was no material to indicate that
an attempt was made by the respondent to deliver the goods at a different
place and to sell them in the local market evading CGST and SGST. The High
Court has also come to the conclusion that since the vehicle was being
driven from Karnataka by the local driver from that State, “it is perfectly
possible for the driver to lose his way on account of being unfamiliar with the
roads” in Hyderabad and bypass Balanagar to proceed to Jeedimetala.
8 Mr Prashant Tyagi, counsel appearing on behalf of the appellant submits that
the High Court was in error in entertaining the writ petition under Article 226
of the Constitution, having regard to the statutory alternative remedy which
is available under Section 107 of the CGST Act. Counsel urged that while the
existence of an alternative remedy under the statute is not an absolute bar
to the maintainability of a writ petition under Article 226, none of the
exceptions which have been enunciated by the judgments of this Court apply
in this case. Hence, it has been urged that the High Court ought not to have
entertained the writ petition. On merits, it has been submitted that the High
Court has proceeded on the basis of surmises. CA 5121/2021
9 On the other hand, it was urged by Mr Shaik Mohamad Haneef, counsel for
the respondent that the High Court having entertained the writ petition, it
was justified on merits in setting aside the detention and the order by which
the tax and penalty was collected under duress. Hence, it is urged that no
interference of this Court is warranted.
10 Section 107 is extracted below:
“107. Appeals to Appellate Authority – (1) Any person aggrieved
by any decision or order passed under this Act or the State Goods and
Services Tax Act or the Union Territory Goods and Services Tax Act by
an adjudicating authority may appeal to such Appellate Authority as
may be prescribed within three months from the date on which the
said decision or order is communicated to such person.
(2) The Commissioner may, on his own motion, or upon request
from the Commissioner of State tax or the Commissioner of Union
territory tax, call for and examine the record of any proceedings in
which an adjudicating authority has passed any decision or order
under this Act or the State Goods and Services Tax Act or the Union
Territory Goods and Services Tax Act, for the purpose of satisfying
himself as to the legality or propriety of the said decision or order and
may, by order, direct any officer subordinate to him to apply to the
Appellate Authority within six months from the date of communication
of the said decision or order for the determination of such points
arising out of the said decision or order as may be specified by the
Commissioner in his order.
(3) Where, in pursuance of an order under sub-section (2), the
authorised officer makes an application to the Appellate Authority,
such application shall be dealt with by the Appellate Authority as if it
were an appeal made against the decision or order of the adjudicating
authority and such authorised officer were an appellant and the
provisions of this Act relating to appeals shall apply to such
application.
(4) The Appellate Authority may, if he is satisfied that the appellant
was prevented by sufficient cause from presenting the appeal within
the aforesaid period of three months or six months, as the case may
be, allow it to be presented within a further period of one month.
(5) Every appeal under this section shall be in such form and shall
be verified in such manner as may be prescribed.
(6) No appeal shall be filed under sub-section (1), unless the
appellant has paid— CA 5121/2021
(a) in full, such part of the amount of tax, interest, fine, fee and
penalty arising from the impugned order, as is admitted by him;
and
(b) a sum equal to ten per cent. of the remaining amount of tax
in dispute arising from the said order, subject to a maximum of
twenty-five crore rupees, in relation to which the appeal has
been filed:
Provided that no appeal shall be filed against an order under sub-
section (3) of Section 129, unless a sum equal to twenty-five per cent.
of the penalty has been paid by the appellant.
(7) Where the appellant has paid the amount under sub-section (6),
the recovery proceedings for the balance amount shall be deemed to
be stayed.
(8) The Appellate Authority shall give an opportunity to the
appellant of being heard.
(9) The Appellate Authority may, if sufficient cause is shown at any
stage of hearing of an appeal, grant time to the parties or any of them
and adjourn the hearing of the appeal for reasons to be recorded in
writing:
Provided that no such adjournment shall be granted more than three
times to a party during hearing of the appeal.
(10) The Appellate Authority may, at the time of hearing of an
appeal, allow an appellant to add any ground of appeal not specified
in the grounds of appeal, if it is satisfied that the omission of that
ground from the grounds of appeal was not wilful or unreasonable.
(11) The Appellate Authority shall, after making such further
inquiry as may be necessary, pass such order, as it thinks just and
proper, confirming, modifying or annulling the decision or order
appealed against but shall not refer the case back to the adjudicating
authority that passed the said decision or order:
Provided that an order enhancing any fee or penalty or fine in lieu of
confiscation or confiscating goods of greater value or reducing the
amount of refund or input tax credit shall not be passed unless the
appellant has been given a reasonable opportunity of showing cause
against the proposed order:
Provided further that where the Appellate Authority is of the opinion
that any tax has not been paid or short-paid or erroneously refunded,
or where input tax credit has been wrongly availed or utilised, no
order requiring the appellant to pay such tax or input tax credit shall
be passed unless the appellant is given notice to show cause against
the proposed order and the order is passed within the time limit
specified under Section 73 or Section 74. CA 5121/2021
(12) The order of the Appellate Authority disposing of the appeal
shall be in writing and shall state the points for determination, the
decision thereon and the reasons for such decision.
(13) The Appellate Authority shall, where it is possible to do so, hear
and decide every appeal within a period of one year from the date on
which it is filed:
Provided that where the issuance of order is stayed by an order of a
court or Tribunal, the period of such stay shall be excluded in
computing the period of one year.
(14) On disposal of the appeal, the Appellate Authority shall
communicate the order passed by it to the appellant, respondent and
to the adjudicating authority.
(15) A copy of the order passed by the Appellate Authority shall also
be sent to the jurisdictional Commissioner or the authority designated
by him in this behalf and the jurisdictional Commissioner of State tax
or Commissioner of Union Territory Tax or an authority designated by
him in this behalf.
(16) Every order passed under this section shall, subject to the
provisions of Section 108 or Section 113 or Section 117 or Section 118
be final and binding on the parties.”
11 The respondent had a statutory remedy under section 107. Instead of
availing of the remedy, the respondent instituted a petition under Article
226. The existence of an alternate remedy is not an absolute bar to the
maintainability of a writ petition under Article 226 of the Constitution. But a
writ petition can be entertained in exceptional circumstances where there is:
(i) a breach of fundamental rights;
(ii) a violation of the principles of natural justice;
(iii) an excess of jurisdiction; or
(iv) a challenge to the vires of the statute or delegated legislation.
12 In the present case, none of the above exceptions was established. There
was, in fact, no violation of the principles of natural justice since a notice was
served on the person in charge of the conveyance. In this backdrop, it was CA 5121/2021
not appropriate for the High Court to entertain a writ petition. The
assessment of facts would have to be carried out by the appellate authority.
As a matter of fact, the High Court has while doing this exercise proceeded
on the basis of surmises. However, since we are inclined to relegate the
respondent to the pursuit of the alternate statutory remedy under Section
107, this Court makes no observation on the merits of the case of the
respondent.
13 For the above reasons, we allow the appeal and set aside the impugned
order of the High Court. The writ petition filed by the respondent shall stand
dismissed. However, this shall not preclude the respondent from taking
recourse to appropriate remedies which are available in terms of Section 107
of the CGST Act to pursue the grievance in regard to the action which has
been adopted by the state in the present case.
14 Pending applications, if any, stand disposed of.
[Dr Dhananjaya Y Chandrachud]
[Vikram Nath]
[Hima Kohli] New Delhi; September 03, 2021 CKB CA 5121/2021
ITEM NO.22 Court 4 (Video Conferencing) SECTION XII-A
SPECIAL LEAVE PETITION (CIVIL) Diary No.11555/2020
(Arising out of impugned final judgment and order dated 04-03-2020 in WP No.2161/2020 passed by the High Court for The State of Telangana at Hyderabad)
THE ASSISTANT COMMISSIONER OF STATE TAX & ORS. Petitioner(s)
VERSUS
M/S COMMERCIAL STEEL COMPANY Respondent(s)
(With appln.(s) for IA No. 51165/2020 - EXEMPTION FROM PAYING COURT FEE)
Date : 03-09-2021 These matters were called on for hearing today.
CORAM :
For Petitioner(s) Mr. Prashant Tyagi, Adv.
Mr. P. Venkat Reddy, Adv.
Mr. P. Srinivas Reddy, Adv.
M/s. Venkat Palwai Law Associates
For Respondent(s) Mr. Shaik Mohamad Hanif, Adv.
Mrs. Srilakshmi Velicheti, Adv.
Mrs. Divya Mishra, Adv.
Mrs. Suresh Kumar, Adv.
Mr. Irshad Ahmad, AOR CA 5121/2021
UPON hearing the counsel the Court made the following
O R D E R
1 Leave granted.
2 The appeal is allowed in terms of the signed reportable judgment.
3 Pending applications, if any, stand disposed of.
(CHETAN KUMAR) (SAROJ KUMARI GAUR) A.R.-cum-P.S. Court Master
(Signed reportable judgment is placed on the file)