GST UPDATE No 159 ON CHALLENGING SCN BY WRIT PETITION

The taxation statue prescribes a mechanism for the assessee to defend their case whenever demand is raised against them. The hierarchy of litigation in GST law is issuance of show cause notice for adjudication of the case leading to passing of order in original. Appeal may be filed before the first appellate authority, i.e., Commissioner Appeals against the order in original by the person aggrieved with the said order. The Commissioner Appeals pass Order in Appeal, deciding the appeal filed before it which can be further appealed to the Tribunal constituted under the statue. Thereafter, the appeals may be preferred to High Court and finally to the Supreme Court. Every assessee is required to pass this stipulated channel in order to get justice. Now, the question arises is whether it is permissible for the assessee to knock the doors of High Court at the show cause notice stage itself? This issue was recently dealt with by the Hon’ble Orissa High Court in the case of SRI RAJENDRA NARAYAN MOHANTY V/S CT GST CUTTACK. The analysis of this decision is the subject matter of discussion of our present update. The petitioner received TDS for the months October 2018, November 2018, January 2019, February 2019 and March 2019 for the Financial Year 2018-19. However, tax liability was not discharged by them because “NIL” liability was disclosed by the petitioner while filing GSTR-3B. The petitioner submitted that while filing Annual Return as on 20.12.2020 for FY 18-19, correct figures were disclosed by them. The petitioner contended that the proper officer restricted them from availing input tax credit from their credit ledger and submitted that instruction cannot have overriding effect over provisions of statue. Further, the petitioner contended that the proper officer has no jurisdiction to invoke provisions in the present case. Therefore, writ petition is filed in the High Court by the petitioner without filing reply to the show cause notice. The High Court held that the petitioner filed writ petition without replying to the objections raised in the show cause notice and thus, writ petition is not maintainable. Reliance was placed on the decision of Hon’ble Supreme Court in the case of UNION OF INDIA V/S COASTAL CONTAINER TRANSPORTERS ASSOCIATION wherein it was held that writ petition will not be entertained in case alternate remedy is available under statue. The Court held that the petitioner ought to have responded to the show cause notice and follow a proper channel before approaching the High Court. The petitioner during the course of hearing submitted that although input credit is utilized against payment of output tax but no interest is paid against delayed payment. The Court ordered petitioner to file reply within a period of 15 days and directed the proper officer to pass appropriate order after considering the submissions made by the petitioner. We all are aware that as the GST Appellate Tribunal has not been constituted till date, the High Courts are already flooded with petitions. Moreover, the burden of litigation in High Courts is substantial and so petitions cannot be preferred to High Courts for taxation matters wherein hierarchy of litigation is pre-defined. However, we all know that exceptions are always there and High Courts have exercised their discretionary powers many times for serving justice to the assesses. In this context, reference may be made to the Apex Court judgment rendered in the case of ASSISTANT COMMISSIONER OF STATE TAX VERSUS COMMERCIAL STEEL LTD. [2021 (52) G.S.T.L. 385 (S.C.)] wherein it has been held that the High Court has power to exercise writ jurisdiction in the following circumstances-breach of fundamental rights, violation of principles of natural justice, excess of jurisdiction or challenge to the vires of the statue or delegated legislation. The High Courts refuse to grant any relief in cases other than the exceptions as stated and directs the assessee to follow the prescribed dispute channel as prescribed in the Statue. Similarly, reference may be made to the following judicial pronouncements wherein the view of the High Court regarding dismissal of writ petition in case of availability of statutory alternate remedy was upheld:- • R.K. ANGANGBI SINGH V. COMMISSIONER – [2016 (332) E.L.T. A247 (S.C.)] • VISHNU & COMPANY PVT. LTD. V. SUPERINTENDENT – [2016 (332) E.L.T. A141 (S.C.)] • UNION OF INDIA VERSUS RUBBER PRODUCTS LTD. [2015 (326) E.L.T. 232 (S.C.)] • GENERAL CEMENT PRODUCTS LTD. V. COMMISSIONER – [2015 (323) E.L.T. A21 (S.C.)] • [SIMPLEX INFRASTRUCTURE LIMITED V. UNION OF INDIA - 2015 (321) E.L.T. A208 (S.C.)] The above decisions clearly indicate that the assessee should be cautious while filing writ petitions against show cause notice because High Courts entertain writs only if the case is covered by exceptional circumstances. Filing writ petition without filing reply to the show cause notice has the inherent risk of expiry of the time limit for filing reply. Therefore, the decision of challenging show cause notice by way of filing writ petition should be exercised judiciously.

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GST UPDATE No 159 ON CHALLENGING SCN BY WRIT PETITION

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