2025 (1) TMI 711 - HC - GST

Maintainability of petition - availability of alternative remedy - Challenge to impugned order on the premise that the impugned order traverses beyond the Show Cause Notice - non-application of mind to the objection which was filed by the petitioner in response to the notice - violation of principles of natural justice - HELD THAT - This Court is conscious of the fact that writ petition under Article 226 of the Constitution of India would not be entertained normally if statutory remedy is availed. However, existence of alternate remedy is not an embargo or an absolute bar to exercise power under Article 226 of the Constitution of India but a self-imposed restriction and the following circumstances viz., violation of principles of natural justice or lack of jurisdiction or error apparent on the face of the record are some of the exceptions carved out to the rule of alternate remedy for exercise of discretion under Article 226 of the Constitution of India. This Court is of the view that the impugned order warrants interference for more than one reason. The impugned order does not deal with objection submitted by the petitioner dated 16.05.2024 wherein it has been specifically stated that any alleged escapement of turnover was only due to the fact that it related to the value of supplies effected during the previous year. More importantly, the impugned order traverses beyond the Show Cause Notice and is thus hit by Section 75(7) of the Act. Conclusion - The impugned order is set aside inasmuch as there is non-application of mind to the reply which has been filed by the petitioner. It is trite law that when a reply is filed, it is incumbent on the assessing authority to apply its mind to the objections raised and return findings on the issues so raised. Failure to do so, would vitiate the proceedings. Petition disposed off.

1. ISSUES PRESENTED and CONSIDERED

The core legal questions considered in this judgment are as follows:

Whether the impugned order traverses beyond the Show Cause Notice, thereby violating Section 75(7) of the GST Act.
Whether there was a non-application of mind by the assessing authority to the objections raised by the petitioner in response to the Show Cause Notice.
Whether the writ petition is maintainable under Article 226 of the Constitution of India despite the existence of an alternate statutory remedy.

2. ISSUE-WISE DETAILED ANALYSIS

Issue 1: Traversing Beyond the Show Cause Notice

Relevant Legal Framework and Precedents: Section 75(7) of the GST Act stipulates that the amount of tax, interest, and penalty demanded in the order shall not exceed the amount specified in the notice, and no demand shall be confirmed on grounds other than those specified in the notice.
Court's Interpretation and Reasoning: The court found that the impugned order addressed issues not included in the Show Cause Notice, such as advances adjusted, sale of fixed assets, and non-GST supply, which constitutes a violation of Section 75(7).
Key Evidence and Findings: The petitioner provided evidence that the discrepancies regarding TDS deductions and other issues were not part of the original Show Cause Notice.
Application of Law to Facts: By addressing issues beyond the Show Cause Notice, the impugned order was deemed to have violated the statutory framework of Section 75(7).
Treatment of Competing Arguments: The respondent argued that the order was appealable and thus should not be entertained by the court. However, the court found merit in the petitioner's claim of the order exceeding the Show Cause Notice.
Conclusions: The court concluded that the impugned order was invalid as it traversed beyond the Show Cause Notice, violating Section 75(7) of the GST Act.

Issue 2: Non-Application of Mind

Relevant Legal Framework and Precedents: It is a fundamental principle that the assessing authority must consider objections raised in response to a Show Cause Notice and provide reasoned findings.
Court's Interpretation and Reasoning: The court observed that the assessing authority failed to consider the petitioner's objections, which is a violation of natural justice principles.
Key Evidence and Findings: The petitioner's objections, particularly concerning the timing of TDS deductions and the corresponding financial years, were not addressed in the impugned order.
Application of Law to Facts: The failure to address the petitioner's objections constituted a non-application of mind, rendering the order procedurally flawed.
Treatment of Competing Arguments: The court did not find any compelling argument from the respondent to justify the non-consideration of the petitioner's objections.
Conclusions: The court concluded that the impugned order was procedurally defective due to the non-application of mind to the petitioner's objections.

Issue 3: Maintainability of the Writ Petition

Relevant Legal Framework and Precedents: Article 226 of the Constitution of India allows for the issuance of writs by High Courts. The existence of an alternate remedy is generally a bar, but exceptions include violations of natural justice, lack of jurisdiction, or errors apparent on the face of the record.
Court's Interpretation and Reasoning: The court recognized the exceptions to the rule of alternate remedy and found that the present case fell within these exceptions due to the procedural violations in the impugned order.
Key Evidence and Findings: The court's findings on the procedural defects and statutory violations supported the maintainability of the writ petition.
Application of Law to Facts: Given the procedural and substantive defects in the impugned order, the court exercised its discretion to entertain the writ petition.
Treatment of Competing Arguments: The respondent's argument regarding the appealability of the order was not sufficient to bar the writ petition, given the identified exceptions.
Conclusions: The court held that the writ petition was maintainable under Article 226 due to the identified procedural and statutory violations.

3. SIGNIFICANT HOLDINGS

Preserve Verbatim Quotes of Crucial Legal Reasoning: "The impugned order traverses beyond the Show Cause Notice and is thus hit by Section 75(7) of the Act."
Core Principles Established: The assessing authority must adhere strictly to the grounds specified in the Show Cause Notice, and any deviation renders the order invalid. Additionally, objections raised by the petitioner must be duly considered to uphold principles of natural justice.
Final Determinations on Each Issue: The impugned order was set aside due to its procedural and substantive defects. The court directed that the order be treated as a Show Cause Notice, allowing the petitioner to submit objections within two weeks, which must be considered by the respondent with a reasonable opportunity for hearing.

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