The Honorable Supreme Court in the case of The Assistant Commissioner of State Tax and Others v M/s Commercial Steel Limited reported at 2021 (9) TMI 480 - Supreme Court requisites seeking of statutory alternative remedy available under the CGST Act before filing of Writ.
Facts of the case
The Respondent is a proprietary concern engaged in the business of iron and steel. The respondent purchased certain goods from a dealer, JSW Steel Limited, Karnataka, under a tax invoice. The consignment of goods was being carried in a truck with KA registration. While it was proceeding from the State of Karnataka, it was intercepted at Jeedimetala. The tax invoice indicated that the goods were earmarked for delivery at Balanagar, Telangana. The case of the appellants is that Balanagar is situated between the State of Karnataka and Jeedimetala and that no reasonable person would cross Balanagar and then turn around to go back to the place of destination. The purchase value of the goods appeared to be in the amount of ₹ 11,14, 579 from the tax invoices.
The case of the revenue was that in the guise of an inter-State sale, the respondent was attempting to sell the goods in the local market by evading SGST and CGST. An order of detention was issued in Form GST MOV-06 on 12 December 2019 and a notice was served on the person in charge of the conveyance. The respondent paid the tax and penalty, following which the goods and the conveyance were released on 13 December 2019.
The respondent instituted writ proceedings under Article 226 of the Constitution before the High Court in order to challenge the order of detention dated 12 December 2019 and the notice which was issued under Section 20 of the IGST Act 2017. A refund of tax was sought. A counter affidavit was filed on behalf of the appellants before the High Court.
The High Court entertained the writ petition and ordered the refund of the amount collected towards tax and penalty together with interest. The High Court has observed that a mere possibility of a local sale would not clothe the officials to take such an action and there was no material to indicate that an attempt was made by the respondent to deliver the goods at a different place and to sell them in the local market evading CGST and SGST. The High Court has also come to the conclusion that since the vehicle was being driven from Karnataka by the local driver from that State, “it is perfectly possible for the driver to lose his way on account of being unfamiliar with the roads” in Hyderabad and bypass Balanagar to proceed to Jeedimetala.
The Appellant submits that the High Court was in error in entertaining the writ petition under Article 226 of the Constitution, having regard to the statutory alternative remedy which is available under Section 107 of the CGST Act. Counsel urged that while the existence of an alternative remedy under the statute is not an absolute bar to the maintainability of a writ petition under Article 226, none of the exceptions which have been enunciated by the judgments of this Court apply in this case. Hence, it has been urged that the High Court ought not to have entertained the writ petition. On merits, it has been submitted that the High Court has proceeded on the basis of surmises.
What was held
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. But 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. As a matter of fact, 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.
For the above reasons, we allow the appeal and set aside the impugned order of the High Court. The writ petition filed by the respondent shall stand dismissed. However, this shall not preclude the respondent from taking recourse to appropriate remedies which are available in terms of Section 107 of the CGST Act to pursue the grievance in regard to the action which has been adopted by the state in the present case.