2024 (12) TMI 332 - HC - GST

Maintainability of petition - availability of alternative remedy - statutory requirement of pre-deposit - appealable order or not - Challenge to order passed by the Joint Commissioner of CGST and Central Excise - HELD THAT - Admittedly, the impugned order dated 30 May 2024 is appealable under the provisions of the CGST Act. Accordingly, it is quite surprising with the first sentence in paragraph 13 of this Petition wherein it is pleaded that the Petitioner has no alternative, much less an efficacious remedy against the impugned actions of the Respondents 2 and 4. The circumstance that the statute requires a pre-deposit for instituting an appeal can hardly be a ground to bypass the statutory remedy - This petition does not question the constitutional validity of this provision; however, several High Courts have upheld it. The impugned order holds that the facts attract the provisions of Section 16 (2) (c) of the CGST Act. The petitioner disputes this position and, in any event, relies on a circular. The only reason for the non-exhaustion of the alternate remedy is the statutory requirement of pre-deposit. It is evident that the Petitioner, by instituting this Petition, only intended to take a chance and see whether any relief can be obtained by bypassing the statutory remedy and bypassing the requirement of pre-deposit. The extraordinary and discretionary jurisdiction under Article 226 of the Constitution cannot be exercised for such purposes. In KOTAK MAHINDRA BANK PVT. LIMITED VERSUS AMBUJ A. KASLIWAL ORS. 2021 (2) TMI 1251 - SUPREME COURT the Hon ble Supreme Court held that the High Court gravely erred in giving the pre-deposit entirely in its writ jurisdiction, merely because the significant portion of the debt due stood paid to the bank. The Court held that the same, at best, could be a reason to reduce a pre-deposit to the lowest figure permitted by the statute, i.e., 25% of the late fee. The pre-deposit amount could not have been reduced below the statutory remedy, and discretion under Article 226 of the Constitution cannot be exercised against the mandatory requirement of statutory provision. This Petition is dismissed, leaving it open to the Petitioner to avail of all alternate remedies under the CGST Act.

Summary

Issues:
Challenge to order of Joint Commissioner of CGST and Central Excise; Bypassing statutory remedy by filing a writ petition instead of appeal under CGST Act; Pre-deposit requirement for appeal; Jurisdiction under Article 226 of the Constitution; Adjudication process avoidance.

Analysis:
The High Court heard arguments challenging the order dated 30 May 2024 passed by the Joint Commissioner of CGST and Central Excise. The Petitioner initially claimed no alternative remedy against the Respondents' actions, but later admitted the availability of an alternate remedy under Section 107 of the CGST Act. The Petitioner justified filing a writ petition due to the pre-deposit requirement for appeal and the insolvency of one of the respondents. However, the Court emphasized that the pre-deposit requirement cannot be a reason to bypass the statutory remedy, as it involves both legal and factual aspects.

The impugned order was based on Section 16(2)(c) of the CGST Act, which the Petitioner disputed, citing reliance on a circular. The Court refrained from commenting on the merits of the order to avoid prejudicing the Petitioner's potential appeal. The Court noted the Petitioner's conduct mirrored other cases where statutory remedies were bypassed to stall adjudication or avoid pre-deposit requirements. The Petitioner's reluctance to deposit the demanded amount further indicated an attempt to seek relief by bypassing statutory provisions.

Citing legal precedents, the Court clarified that the discretionary jurisdiction under Article 226 of the Constitution cannot be used to evade statutory requirements. The Court highlighted the importance of exhausting alternate remedies and the consequences of bypassing such procedures. Referring to specific cases, the Court emphasized that parties should not be allowed to bypass statutory remedies without sufficient cause or to avoid pre-deposit requirements.

Ultimately, the Court dismissed the Petition, urging the Petitioner to avail all alternate remedies under the CGST Act. The Court clarified that it had not assessed the merits of the case, leaving all contentions open for further proceedings. The judgment underscored the significance of following statutory procedures and exhausting alternate remedies before seeking extraordinary judicial intervention.