2024 (7) TMI 52 - HC - GST

Maintainability of alternative remedy of appeal - Refund claim - principles of unjust enrichment - exemption of GST available relating to health care services - rejection on the ground that even without charging the GST on the medicines and the consumable bills by the petitioners, the rate of medicines supplied to the in-house-patients was at the market price and therefore GST was included and the burden of tax has been shifted to the consumer - HELD THAT - It is by now well settled that the power to issue prerogative writs under Article 226 of the Constitution of India is plenary in nature and is not limited by any other provision of the Constitution. It is equally well settled that under Article 226 of the Constitution of India, the High Court, is having discretion to entertain or not to entertain a writ petition, having regard to the facts and circumstances of the case. The availability of alternative remedy is a self-imposed restriction and normally High Court should not exercise its discretion under writ jurisdiction, when an effective and efficacious remedy is available. However, such alternative remedy shall not operate as a bar, where the writ petition has been filed for enforcement of any of the fundamental right or where there has been violation of the principle of natural justice or where the orders or proceedings are wholly without jurisdiction or the vires of an Act is challenged. In the case in hand, it is clear that under the scheme of Act there is provision for appeal and revision under Section 107. Thus, rights of appeal and revision have statutorily been created. Such provision of appeal prescribes the remedy and procedure for enforcing right of an aggrieved party, who is aggrieved by an order passed by an adjudicating authority. In the case in hand, the impugned orders have been passed by the Assistant Commissioner, GST Central Excise, who is an adjudicating authority. That being the position, it is clear that the petitioners are having an alternative efficacious remedy which is statutorily been created. The petitioners have also not alleged that the orders are wholly without jurisdiction inasmuch it is the petitioners, who have raised the claim of refund before the adjudicating authority - There is also no challenge to the vires of any legislation in the present batch of writ petitions. Therefore, on this count also, this court is not inclined to exercise its discretion under Article 226 of the Constitution of India. Petition dismissed.

Summary

Issues Involved:
1. Maintainability of writ petitions due to the availability of an alternative remedy under Section 107 of the CGST Act.
2. Legality of the show cause notices and orders rejecting the refund claims based on GST exemption for health care services.

Issue-wise Detailed Analysis:

1. Maintainability of Writ Petitions:
The respondent raised an objection regarding the maintainability of the writ petitions, citing the availability of an alternative remedy under Section 107 of the CGST Act, 2017. Section 107 provides for an appeal to the Appellate Authority against decisions or orders passed by an adjudicating authority. The Court emphasized that the power to issue prerogative writs under Article 226 of the Constitution of India is plenary and discretionary. However, it is a self-imposed restriction that ordinarily, the High Court should not exercise its writ jurisdiction when an effective and efficacious remedy is available unless there is a violation of fundamental rights, principles of natural justice, lack of jurisdiction, or a challenge to the vires of an Act. The Court found that the petitioners had an alternative remedy and had not demonstrated any violation of fundamental rights, principles of natural justice, or jurisdictional issues. Therefore, the writ petitions were deemed not maintainable.

2. Legality of Show Cause Notices and Orders:
The petitioners challenged the show cause notices and subsequent orders rejecting their refund claims for GST paid on health care services. The petitioners argued that they provided comprehensive health care services, including medicines and consumables, which are exempt from GST under entry SL No. 74(a) of Notification No. 12/2017 Central Tax (Rate) dated 28.06.2017. They claimed that the GST paid on internal transfers of medicines and consumables to in-house patients was paid by mistake due to ignorance of the law and sought a refund under Section 54 of the CGST Act. The respondents contended that the petitioners sold medicines and consumables at market prices, thereby including GST and shifting the tax burden to consumers. Additionally, the pharmacy was registered for supplying goods, not health care services, at the relevant time. The Court noted that these disputes involved questions of fact that could be resolved more effectively by the Appellate Authority under Section 107 of the CGST Act. Consequently, the Court dismissed the writ petitions and directed the petitioners to approach the Appellate Authority.

Conclusion:
The High Court dismissed the writ petitions, granting the petitioners liberty to approach the Appellate Authority. The period spent in the High Court would not be counted towards the prescribed period for filing an appeal. The judgment underscores the importance of exhausting statutory remedies before invoking the discretionary writ jurisdiction of the High Court.