2025 (4) TMI 1512 - HC - GST

Maintainability of petition - availability of alternative remedy - Demands due to excess availment of Input Tax Credit - levy of penalty - HELD THAT - A perusal of the impugned order would show that there is a detailed discussion as to the nature of services which the Petitioner has provided and the reasons as to why the department is of the opinion that the higher rate of tax would be applicable. The question as to whether there was fraud and wilful-misstatement of fact on behalf of the Petitioner or not would require an analysis of the facts and various returns which were filed by the Petitioner which cannot not be done in a writ petition - In fact the impugned order is clearly an appealable order under Section 107 of the CGST Act and the Appellant ought to be relegated to the appropriate appellate remedy so that all the issues which have been raised today can be raised before the Appellate Authority. The Court is of the opinion that the nature of the matter and the records that would be required to be perused in a challenge to the impugned order would not be the scope in a petition under Article 226 of the Constitution of India - The Petitioner is accordingly relegated to the appellate remedy under Section 107 of the CGST Act. Petition disposed off.

Summary

1. ISSUES PRESENTED and CONSIDERED

The core legal questions considered by the Court include:

- Whether the extended period of limitation under the Central Goods and Service Tax Act, 2017 (CGST Act) could be invoked against the Petitioner in the absence of fraud or wilful misstatement of fact.

- Whether the Petitioner's claim regarding the rate of Goods and Service Tax (GST) applicable (12% versus 18%) constitutes a question of law that can be adjudicated in a writ petition under Article 226 of the Constitution of India.

- Whether the impugned Order-in-Original issued by the Additional Commissioner, demanding tax and imposing penalties for alleged excess availment of Input Tax Credit (ITC), is appealable under Section 107 of the CGST Act and whether the Petitioner should be relegated to the appellate remedy.

- Whether errors alleged by the Petitioner in the record regarding non-consideration of certain filed documents can be examined in the writ petition.

- The scope and appropriateness of invoking writ jurisdiction under Article 226 in matters involving detailed factual and technical examination of GST returns and classification disputes.

2. ISSUE-WISE DETAILED ANALYSIS

Issue 1: Invocation of Extended Period of Limitation in Absence of Fraud or Wilful Misstatement

The relevant legal framework is the CGST Act, which provides for limitation periods for recovery of tax dues, with an extended limitation period available in cases involving fraud or wilful misstatement. The Petitioner contended that no such fraud or wilful misstatement occurred, and hence the extended period should not apply.

The Court observed that determination of fraud or wilful misstatement requires a detailed factual analysis of the returns and documents filed by the Petitioner. Such an inquiry falls beyond the scope of a writ petition under Article 226, which is not a forum for detailed fact-finding or reappraisal of evidence. Therefore, the Court refrained from adjudicating on this issue at the writ stage.

The Court emphasized that this factual determination is better suited for the Appellate Authority under the CGST Act, which has the jurisdiction and expertise to examine such matters.

Issue 2: Classification Dispute Regarding Applicable GST Rate (12% vs. 18%) as a Question of Law

The Petitioner argued that the dispute over the applicable GST rate is a pure question of law that this Court can decide. The Court acknowledged that classification disputes can often involve legal interpretation.

However, the Court noted that the impugned order contains a detailed discussion of the nature of services provided by the Petitioner and the reasons for applying the higher tax rate. This indicates that the dispute is intertwined with factual findings and an examination of the service characteristics.

The Court held that such disputes, involving mixed questions of fact and law, especially in tax matters, are more appropriately resolved by the Appellate Authority under the CGST Act rather than through writ jurisdiction. The Court further observed that classification disputes do not per se amount to wilful misstatements or fraud.

Issue 3: Appealability of the Impugned Order and Appropriateness of Writ Petition

Section 107 of the CGST Act provides for appeal against certain orders passed by tax authorities. The Respondents contended that the impugned order is appealable and the Petitioner should pursue the statutory appellate remedy.

The Court concurred with this position, holding that the impugned order is clearly appealable under Section 107. The Court emphasized that the Petitioner must avail the statutory appellate remedy, where all issues including limitation, classification, and alleged errors in record can be fully argued and examined.

The Court found that the writ petition under Article 226 is not the appropriate forum for challenging such orders, especially given the need for detailed scrutiny of records and technical issues.

Issue 4: Alleged Errors in Record and Non-Consideration of Filed Documents

The Petitioner submitted that certain documents filed were erroneously recorded as not filed or considered in the impugned order. The Court noted these contentions but held that such factual and documentary disputes require examination of records and evidence, which is beyond the scope of a writ petition.

The Court indicated that these contentions can be agitated and examined before the Appellate Authority, which has the jurisdiction to review the record and correct any errors.

Issue 5: Scope of Writ Jurisdiction in GST Matters Involving Detailed Fact-Finding

The Court underscored that writ jurisdiction under Article 226 is discretionary and not a substitute for statutory appellate remedies, particularly in complex tax matters involving detailed factual and documentary analysis.

The Court held that the nature of the impugned order and the records to be examined do not fall within the limited scope of writ jurisdiction. It emphasized that the Petitioner should pursue the appeal route to ensure a comprehensive and expert adjudication of all issues.

The Court also clarified that it has not considered the merits of the case in the writ petition and that all contentions must be raised before the Appellate Authority.

3. SIGNIFICANT HOLDINGS

- "The question as to whether there was fraud and wilful-misstatement of fact on behalf of the Petitioner or not would require an analysis of the facts and various returns which were filed by the Petitioner, which cannot not be done in a writ petition."

- "The impugned order is clearly an appealable order under Section 107 of the CGST Act and the Appellant ought to be relegated to the appropriate appellate remedy so that all the issues which have been raised today can be raised before the Appellate Authority."

- "The nature of the matter and the records that would be required to be perused in a challenge to the impugned order, would not be the scope in a petition under Article 226 of the Constitution of India."

- "Whenever there is a classification dispute, the same cannot not be a wilful-misstatement."

- "All the above contentions shall be agitated by the Petitioner before the Appellate Authority who shall consider the same on their merits."

- The Court ordered that the Petitioner is relegated to the appellate remedy under Section 107 of the CGST Act and must comply with the pre-deposit condition under Section 74(5) of the CGST Act on the tax demanded (excluding penalties) if the appeal is filed within 30 days.