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2024 (8) TMI 137 - HC - GSTMaintainability of petition - alternative remedy available to the petitioner to challenge the impugned order - Applicability of provision of Section 16 (2)(b) and 16 (2) (c) of GST Act - vires of the statute being challenge to Section 16 (2) (c) - reversal of the Input Tax Credit - impugned order is a non speaking order - no opportunity of hearing was provided to the petitioner - violation of principles of natural justice. Maintainability of petition - alternative remedy available to the petitioner to challenge the impugned order - HELD THAT - Hon ble Supreme Court in the case of M/s. Commercial Steel Ltd. 2021 (9) TMI 480 - SUPREME COURT in the similar facts has held that in view of remedy available under Section 107 of the Act instead of the petitioner should be relegated to avail such remedy instead of availing remedy, present petition should not be entertained if the exception stated therein are non-existent. In the facts of the case that two conditions namely violation of the principle of natural justice and a challenge to the vires of the statute or delegated legislation can be said to be attracted to entertain this petition as canvassed on behalf of the petitioner. The petitioner has contended that no personal hearing was given and therefore, there is violation of principle of natural justice and the petitioner has challenged the vires of Section 16 (2) (c) of the GST Act and therefore, the petitioner should not be entertained instead of relegating the petitioner to avail alternative efficacious remedy. Violation of principle of natural justice - HELD THAT - As it emerges from the facts of the record, there are disputed questions of fact with regard to granting opportunity of hearing to the petitioner. On one hand as the respondent-authority has categorically recorded that the personal hearing was provided and the petitioner did not remain present, whereas, on the other hand, the petitioner has disputed such statement in the impugned order by contending that no notice for personal hearing was served upon the petitioner. Therefore, such issue with regard to providing opportunity of hearing has given rise to the disputed questions of fact which cannot be considered while in this writ proceeding under Article 226 of the Constitution of India. Vires of the statute being challenge to Section 16 (2) (c) - HELD THAT - When, it is a composite invocation of Section 16 (2)(b) and Section 16 (2) (c) of the GST Act even if, the vires of Section 16 (2) (c) GST Act are challenged in the present proceedings, the question of ascertaining the facts and the documents produced on record for the adjudication vis-a-vis the violation of Section 16 (2) (b) is concerned, it would require thorough analysis of the documents on record - this is an exceptional circumstances as held by the Hon ble Apex Court in the case of M/s. Commercial Steel Ltd, so as to entertain this writ petition on the grounds canvassed by the petitioner. With regard to the other contentions of the petitioner, the same are on merits which the petitioner is entitled to raise with regard to the interpretation of Section 16 (2) (b) read with Rule 36 and Section 155 of the Act relating to the burden of proof can be raised before the Appellate Authority in the appeal which may be filed by the petitioner under Section 107 of the GST Act. It is opined that no interference is required at this stage in view of the availability of the alternative an efficacious remedy, and the petitioner is not precluded for taking recourse to the appropriate remedy which is available in terms of Section 107 of the GST Act to pursue the grievance with regard to challenge the impugned order dated 22.2.2024 passed by the respondent-authority under Section 74 (5) read with Section 74 (9) of the CGST Act, 2017. Petition dismissed.
Issues:
1. Challenge to the vires of Section 16 (2) (c) of the GST Act. 2. Violation of principles of natural justice regarding opportunity of hearing. Analysis: Issue 1: Challenge to the vires of Section 16 (2) (c) of the GST Act The petitioner contended that Section 16 (2) (c) of the GST Act is ultra vires to Article 14 and 19 (1) (g) of the Constitution of India. The petitioner argued that the impugned order for reversal of Input Tax Credit was based on this section. The petitioner submitted that the respondent-authority did not consider the documents provided by the petitioner, which were in compliance with Rule 36 of the GST Rules, to support the Input Tax Credit claim. The petitioner also raised concerns about the lack of opportunity for a personal hearing and the failure to provide relevant documents used against the petitioner. The petitioner sought the quashing of the impugned order on these grounds. Issue 2: Violation of principles of natural justice regarding opportunity of hearing The petitioner alleged a violation of the principles of natural justice, specifically regarding the opportunity of a personal hearing. The petitioner claimed that no date for the personal hearing was communicated despite a reminder being issued. The respondent-authority, on the other hand, contended that a personal hearing was provided but the petitioner did not attend. This conflicting information led to disputed questions of fact regarding the opportunity of hearing. The court noted that such factual disputes cannot be resolved in a writ proceeding under Article 226 of the Constitution of India. Conclusion: The court considered the availability of an alternative and efficacious remedy under Section 107 of the GST Act for challenging the impugned order. Citing the decision in a similar case by the Hon'ble Supreme Court, the court held that the petitioner should pursue the remedy under Section 107 instead of seeking relief through the writ petition. The court found no grounds to interfere at that stage and dismissed the petition, directing the petitioner to pursue the appropriate remedy available under the GST Act.
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