2024 (12) TMI 48 - HC - GST

Maintainability of petition - Availability of statutory remedy under Section 107 of the CGST/AGST Act, 2017 - Challenge to Order-in-Original and Summary of the Order - Input Tax Credit ITC in respect of purchase of coal - freezing of the petitioner's bank account - violation of principles of natural justice - HELD THAT - It is well settled that ordinarily in revenue matters, the court does not entertain a petition for a writ under Article 226 of the Constitution of India, where the petitioner has a statutory remedy, which without being unduly onerous, provides an adequate and efficacious remedy. The High Court in its writ jurisdiction, does not generally enter upon a determination of questions which demand an elaborate examination of evidence to establish the right to enforce which the writ is claimed. The High Court does not act as a court of appeal against a decision of a court or tribunal or an adjudicating authority to correct errors of fact, and does not by assuming jurisdiction under Article 226 trench upon an alternative remedy provided by the governing statute for obtaining relief. In the case in hand, it is not the case of the petitioner that the petitioner did not receive the Demand cum- Show Cause Notice. On receipt of the Demand cum- Show Cause Notice, the petitioner ought to have replied to the said Demand cum- Show Cause Notice. By issuance of a show cause notice, a noticee is asked to respond to the proposed action. With issuance of a show cause notice, the rights and obligations of the parties are not decided finally. The event of issuance of a show cause notice is a step towards taking a final decision in the matter by the competent authority. A tentative view taken in the process cannot be deemed to be the final view taken in the matter. It has not emerged that there was total violation of the principles of natural justice in the case in hand. Prima facie the case is not one which falls in the category of no notice and no opportunity of hearing. There is a distinction between a case where there is total violation of the rule of audi alteram partem with no notice and no opportunity of hearing and a case where there is violation of a facet of the rule of audi alteram partem in that the assessee was not afforded with any notice and/or opportunity of hearing. It does not emerge from the facts of the case that the petitioner was not provided with any kind of prior opportunity and hearing before issuance of the impugned Order-in-Original. In view of the fact that an adequate, efficacious and statutory remedy has already been provided to assail an order like the Order-in-Original dated 16.08.2024 before the Appellate Authority, this Court is of the view that this writ petition preferred under Article 226 of the Constitution of India is not to be entertained at this stage, reserving the liberty to the petitioner to avail statutory remedy of appeal under Section 107 of the CGST/AGST Act, 2017. It is accordingly observed. This Court is of the considered view that while not entertaining the writ petition, the same can be disposed of subject to fulfilment of conditions imposed - the writ petition stands disposed of.

Issues Involved:

1. Validity of the Order-in-Original and the Demand-cum-Show Cause Notice under Section 74 of the CGST/AGST Act, 2017.
2. Alleged violation of principles of natural justice in the adjudication process.
3. Availability and adequacy of statutory remedy under Section 107 of the CGST/AGST Act, 2017.
4. Freezing of the petitioner's bank account and its implications on filing an appeal.
5. Applicability of precedent set in a similar case regarding pre-deposit requirements.

Issue-wise Detailed Analysis:

1. Validity of the Order-in-Original and the Demand-cum-Show Cause Notice:

The petitioner challenged the Order-in-Original dated 16.08.2024 and the accompanying Demand-cum-Show Cause Notice issued under Section 74 of the CGST/AGST Act, 2017. The petitioner alleged erroneous refund claims and discrepancies in Input Tax Credit (ITC) claims for the period April 2022 to March 2023. The adjudicating authority demanded tax, interest, and penalty amounting to Rs. 1,06,59,000/- based on these discrepancies. The court noted that the adjudicating authority had taken a tentative view based on the show cause notice, which is a step towards a final decision, and not a final determination of rights and obligations.

2. Alleged Violation of Principles of Natural Justice:

The petitioner argued that the adjudicating authority failed to provide an opportunity for a personal hearing or to submit a reply to the Demand-cum-Show Cause Notice. However, the court observed that the petitioner did receive the notice and had the opportunity to respond, which they did not utilize. The court distinguished between total violation of the rule of audi alteram partem and a mere procedural lapse, concluding that there was no total violation in this case.

3. Availability and Adequacy of Statutory Remedy:

The court emphasized the principle that in revenue matters, a writ petition under Article 226 is not ordinarily entertained when an adequate and efficacious statutory remedy is available. Section 107 of the CGST/AGST Act, 2017 provides for an appeal to the Appellate Authority, which includes provisions for a pre-deposit condition. The court reiterated that the petitioner should first exhaust this statutory remedy before seeking relief through writ jurisdiction.

4. Freezing of the Petitioner's Bank Account:

The petitioner contended that the freezing of their bank account hindered their ability to make the pre-deposit required for filing an appeal. The court acknowledged this issue and referenced a similar case where the petitioner was allowed to file an appeal without pre-deposit, provided the frozen accounts held sufficient funds to meet the pre-deposit requirement.

5. Applicability of Precedent Regarding Pre-deposit Requirements:

The court referred to a previous judgment where a petitioner in a similar situation was permitted to file an appeal without pre-deposit, subject to certain conditions regarding the frozen accounts. The court extended similar relief to the current petitioner, allowing them to file an appeal without pre-deposit if the frozen accounts contained sufficient funds. If not, the petitioner was granted liberty to deposit the required amount to fulfill the mandate under Section 107 [6] [b] of the CGST/AGST Act, 2017.

Conclusion:

The court disposed of the writ petition, directing the petitioner to pursue the statutory remedy of appeal under Section 107 of the CGST/AGST Act, 2017. The court provided specific directions regarding the pre-deposit requirement, considering the frozen status of the petitioner's bank account, thereby balancing equities and ensuring justice.

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