Case Note & Summary
The dispute arose from a judgment of the High Court of Telangana dated 4 March 2020, which set aside the action of the Assistant Commissioner of State Tax and others in collecting tax and penalty under the Central Goods and Services Tax Act, 2017 and State Goods and Services Tax Act from M/s Commercial Steel Limited, directing a refund with interest and imposing costs. The respondent, a proprietary concern engaged in iron and steel business, purchased goods from JSW Steel Limited in Karnataka under a tax invoice dated 11 December 2019, with delivery earmarked for Balanagar, Telangana. The consignment was intercepted on 12 December 2019 at Jeedimetala, and the revenue alleged an attempt to evade SGST and CGST by selling goods locally. An order of detention was issued, and the respondent paid tax and penalty, leading to release of goods on 13 December 2019. The respondent filed a writ petition under Article 226 of the Constitution before the High Court, challenging the detention and notice under Section 20 of the IGST Act, 2017, and seeking refund. The High Court allowed the petition, ordering refund with interest, observing no material indicated an attempt to evade tax and that the driver might have lost his way. The appellant appealed to the Supreme Court, arguing that the High Court erred in entertaining the writ petition due to the statutory alternative remedy under Section 107 of the CGST Act, and that none of the exceptions to the alternative remedy rule applied. The respondent contended that the High Court was justified on merits. The Supreme Court considered the legal issue of whether the High Court was justified in entertaining the writ petition despite the availability of an alternative remedy. The Court analyzed Section 107 of the CGST Act and held that while the existence of an alternative remedy is not an absolute bar to writ jurisdiction under Article 226, a writ petition can be entertained only in exceptional circumstances such as breach of fundamental rights, violation of natural justice, excess of jurisdiction, or challenge to the vires of the statute. The Court found that none of these exceptions were established in this case, as there was no violation of natural justice since a notice was served, and the assessment of facts should be carried out by the appellate authority. The Court noted that the High Court had proceeded on surmises but refrained from making observations on the merits. Consequently, the Supreme Court allowed the appeal, set aside the High Court's order, dismissed the writ petition, and relegated the respondent to pursue the statutory remedy under Section 107 of the CGST Act.
Headnote
A) Constitutional Law - Writ Jurisdiction - Article 226 of the Constitution - Alternative Remedy - High Court entertained writ petition challenging GST detention and tax collection despite statutory appeal under Section 107 of CGST Act - Supreme Court held that existence of alternative remedy is not an absolute bar, but writ petition can be entertained only in exceptional circumstances like breach of fundamental rights, violation of natural justice, excess of jurisdiction, or challenge to vires of statute - None of these exceptions were established, so High Court should not have entertained the writ petition (Paras 11-12). B) Tax Law - Goods and Services Tax - Section 107 of Central Goods and Services Tax Act, 2017 - Statutory Remedy - Respondent had statutory remedy under Section 107 of CGST Act but instead filed writ petition - Supreme Court allowed appeal, set aside High Court order, and relegated respondent to pursue remedy under Section 107, making no observation on merits (Paras 11-13).
Issue of Consideration
Whether the High Court was justified in entertaining a writ petition under Article 226 of the Constitution despite the availability of a statutory alternative remedy under Section 107 of the Central Goods and Services Tax Act, 2017
Final Decision
Supreme Court allowed the appeal, set aside the impugned order of the High Court, dismissed the writ petition filed by the respondent, but did not preclude the respondent from taking recourse to appropriate remedies under Section 107 of the CGST Act
Law Points
- Alternative remedy under Section 107 of CGST Act is not an absolute bar to writ jurisdiction under Article 226 of the Constitution
- but writ petition can be entertained only in exceptional circumstances such as breach of fundamental rights
- violation of natural justice
- excess of jurisdiction
- or challenge to vires of statute
- none of which were established in this case
