2025 (1) TMI 981 - HC - GST

Challenge to order issued u/s 74 of the Central Goods and Services Tax Act 2017 - HELD THAT - This Court notices that the impugned order refers to specific reasons for invoking the powers under Section 74 of the Act. The correctness or otherwise of those reasons cannot be gone into in this proceeding under Article 226 of the Constitution of India as those are disputed facts. The normal remedy for an aggrieved person against an order issued under Section 74 of the Act is to prefer an appeal under Section 107 of the Act. Though the learned counsel for the petitioner vehemently relied upon instruction No. 05/2023 issued by the Central Board of Indirect Taxes Customs which indicates that proceedings under Section 74 of the Act can be invoked only when there is fraud willful misstatement or suppression of facts to evade tax - there are no merit to exercise the jurisdiction under Article 226 of the Constitution of India and relegate the petitioner to pursue his statutory remedies. Conclusion - The appropriate remedy was an appeal under Section 107 not a writ petition. Petition dismissed.

Summary

In the case before the Kerala High Court, the petitioner challenged an order issued under Section 74 of the Central Goods and Services Tax Act, 2017, alleging misclassification of services to evade higher tax rates. The petitioner, a company offering tour packages, was accused of classifying itself as a "tour operator" taxable at 5% instead of a "houseboat service operator" taxable at 18%. The petitioner argued that the order lacked evidence of "fraud, willful misstatement or suppression," claiming it was issued to avoid the limitation period.

The Government Pleader argued that the order was appealable under Section 107 of the Act and that the High Court should not intervene under Article 226 of the Constitution due to specific factual findings justifying the invocation of Section 74. The court agreed, noting that the reasons for invoking Section 74 involved disputed facts unsuitable for resolution under Article 226. The court emphasized that the appropriate remedy was an appeal under Section 107, not a writ petition. Consequently, the writ petition was dismissed, directing the petitioner to pursue statutory remedies.