2021 (9) TMI 480 - SC - GST

Maintainability of petition - availability of alternative remedy of appeal - Refund of the amount collected towards tax and penalty together with interest - inter-State sale - sale of goods in the local market by evading SGST and CGST - violation of principles of natural justice - HELD THAT - The respondent had a statutory remedy under section 107. Instead of availing of the remedy, the respondent instituted a petition under Article 226. The existence of an alternate remedy is not an absolute bar to the maintainability of a writ petition under Article 226 of the Constitution. A writ petition can be entertained in exceptional circumstances where there is (i) a breach of fundamental rights; (ii) a violation of the principles of natural justice; (iii) an excess of jurisdiction; or (iv) a challenge to the vires of the statute or delegated legislation. In the present case, none of the above exceptions was established. There was, in fact, no violation of the principles of natural justice since a notice was served on the person in charge of the conveyance. In this backdrop, it was not appropriate for the High Court to entertain a writ petition. The assessment of facts would have to be carried out by the appellate authority - the High Court has while doing this exercise proceeded on the basis of surmises. However, since we are inclined to relegate the respondent to the pursuit of the alternate statutory remedy under Section 107, this Court makes no observation on the merits of the case of the respondent. The writ petition filed by the respondent shall stand dismissed.

Summary

Issues:
Appeal from High Court judgment setting aside tax and penalty collection under CGST and SGST Acts, direction for refund with interest, and disciplinary action against Assistant Commissioner.

Analysis:
1. High Court Judgment: The High Court, under Article 226, set aside tax and penalty collection by the appellants, directing a refund with interest and ordering disciplinary proceedings against the Assistant Commissioner. The case involved a business concern engaged in iron and steel trade, intercepted while transporting goods from Karnataka to Telangana, leading to a dispute over tax evasion.

2. Grounds for High Court Decision: The High Court found no evidence of an attempt to evade CGST and SGST, emphasizing the possibility of the driver getting lost, justifying the interception. The Court highlighted that mere suspicion of local sale does not warrant such actions, leading to the refund order and disciplinary directions.

3. Challenges to High Court Judgment: The appellant contended that the High Court erred in entertaining the writ petition under Article 226, emphasizing the availability of statutory remedy under Section 107 of the CGST Act. The appellant argued that the High Court based its decision on assumptions rather than facts.

4. Statutory Remedy Under Section 107: Section 107 provides for appeals against decisions under the CGST Act within three months, requiring payment of admitted tax amounts and a percentage of disputed tax for filing an appeal. The respondent failed to avail this statutory remedy, opting for a writ petition instead.

5. Court's Decision: The Supreme Court allowed the appeal, setting aside the High Court's order and dismissing the respondent's writ petition. The Court emphasized the importance of exhausting statutory remedies before seeking judicial intervention under Article 226, refraining from commenting on the merits of the case.

6. Final Verdict: The respondent was directed to pursue remedies under Section 107 of the CGST Act for addressing grievances against the state's actions. The Court's decision highlighted the significance of following statutory procedures before resorting to writ petitions, ensuring proper adjudication and assessment of facts by the appellate authority.