2024 (12) TMI 49 - HC - GST

Maintainability of petition - availability of alternative remedy - Challenge to Order-in-Original and Summary of the Order - entitlement to Input Tax Credit ITC in respect of purchase of coal - refund of ITC on zero-rated supplies - 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 a statutory 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 Notices. On receipt of the Demand cum- Show Cause Notices, the petitioner ought to have replied to the said Demand cum- Show Cause Notices. 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 - In the case in hand, with the petitioner not availing the opportunity of submitting a reply to the show cause notice after seeking time for four weeks and to submit an effective reply and declining to avail any personal hearing to one Show Cause Notice and by not responding to the other Show Cause Notice, it is not open for the petitioner to raise a ground that it was a case of no notice and no opportunity of hearing. 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 06.09.2024 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 with the following observations and directions balancing the equities and for the interest of justice as well as having regard to the fact that the bank account s of the petitioner has/have remained freezed and unoperational since 02.04.2024, a date prior to issuance of the Demand cum- Show Cause Notice dated 08.04.2024 - the writ petition stands disposed of.

Issues Involved:

1. Legality of the Order-in-Original under Section 74 of the CGST/AGST Act, 2017.
2. Alleged violation of principles of natural justice.
3. Parallel proceedings by two Adjudicating Authorities.
4. Composite order for two financial years.
5. Availability of an alternative statutory remedy under Section 107 of the CGST/AGST Act, 2017.
6. Freezing of bank accounts and its impact on appeal filing.

Detailed Analysis:

1. Legality of the Order-in-Original under Section 74 of the CGST/AGST Act, 2017:

The petitioner challenged the Order-in-Original dated 06.09.2024, which demanded Rs. 2,41,78,961/- as tax, interest, and penalty for the period from April 2022 to March 2024. The petitioner argued that the order was passed without proper consideration of their response to the Demand-cum-Show Cause Notice. The court noted that the petitioner had not availed the opportunity to submit a comprehensive reply after initially seeking time, and thus, the order could not be deemed as issued without jurisdiction.

2. Alleged Violation of Principles of Natural Justice:

The petitioner claimed that the principles of natural justice were violated as the Adjudicating Authority did not provide an adequate opportunity for a hearing. However, the court observed that the petitioner had initially stated they did not require a personal hearing and failed to respond to the subsequent Show Cause Notice. Therefore, the court concluded that there was no total violation of the principles of natural justice, as the petitioner was given notice and an opportunity to be heard.

3. Parallel Proceedings by Two Adjudicating Authorities:

The petitioner contended that two parallel proceedings were initiated by different authorities, which was against the provisions of the CGST/AGST Act, 2017. The court did not find merit in this argument, as the petitioner did not effectively respond to the proceedings initiated by either authority. The court emphasized that the petitioner should have addressed the issues in a statutory appeal.

4. Composite Order for Two Financial Years:

The petitioner argued that the composite order for two financial years violated Section 74 of the AGST Act, 2017. The court held that while separate orders for each financial year might have been preferable, a composite order was not without jurisdiction. The petitioner was advised to raise such issues in a statutory appeal.

5. Availability of an Alternative Statutory Remedy under Section 107 of the CGST/AGST Act, 2017:

The court highlighted that the petitioner had an adequate and efficacious statutory remedy under Section 107 of the CGST/AGST Act, 2017, which provides for an appeal to the Appellate Authority. The court reiterated that it generally does not entertain writ petitions when an alternative remedy is available unless exceptional circumstances exist, which were not present in this case.

6. Freezing of Bank Accounts and Its Impact on Appeal Filing:

The petitioner's bank account was frozen, impeding their ability to make the pre-deposit required for filing an appeal. The court referred to a similar case where the Appellate Authority was directed to allow the filing of an appeal without pre-deposit if the frozen account had sufficient funds. The court extended similar relief to the petitioner, allowing the appeal to be entertained without insisting on pre-deposit, subject to the condition that the frozen accounts had sufficient funds.

Conclusion:

The court disposed of the writ petition, emphasizing the availability of a statutory remedy and providing directions to balance equities and ensure justice, particularly concerning the frozen bank accounts. The petitioner was advised to pursue the statutory appeal process under Section 107 of the CGST/AGST Act, 2017.

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