Alternative remedy is not an absolute bar if there is violation of natural justice

[CA Bimal Jain]

The Hon’ble Chhattisgarh High Court in the matter of M/S MAHENDRA SPONGE AND POWER LIMITED VERSUS ASSISTANT COMMISSIONER STATE TAX (SGST) CIRCLE-9, RAIPUR  - 2023 (1) TMI 501 - CHHATTISGARH HIGH COURT quashed and set aside the order passed by the Single Judge directing the assessee to avail the alternate remedy. Held that the availability of alternative remedy cannot be an absolute bar to file a writ petition in cases where the principles of natural justice has been violated.

Facts:

M/s Mahendra Sponge and Power Limited (“the Appellant”) was issued with a notice under Section 61 of the Central Goods and Services Tax Act, 2017 (“the CGST Act”) in Form GST ASMT-10 dated August 11, 2021 followed by a Show Cause Notice (“SCN”) under Section 73 of the CGST Act. Subsequently, the Assistant Commissioner State Tax (“the Respondent”) vide demand order (“the Impugned Order”) had determined the tax liabilities, interest and penalty upon the Appellant and made demand of the amount thereon.

The Appellant instead of approaching the Appellate Authority had filed a Writ Petition, wherein, the Single Judge Bench of the Hon’ble High Court vide Order Mahendra Sponge And Power Limited Versus Assistant Commissioner, State Tax (SGST) , Circle-9, Raipur, Chhattisgarh - 2022 (5) TMI 291 - CHHATTISGARH HIGH COURT, declined to entertain the petition on the ground that the Appellant had alternate remedy available under Section 107 of the CGST Act.

The Appellant had contended that the Single Judge Bench did not consider the provision under Section 75(4) of the CGST Act, wherein it is mentioned that a person being charged with tax or penalty must be given an opportunity of hearing before a decision is made against them. Further, the Appellant had submitted that it had specifically asked for grant of personal hearing, which was not given.

Issue:

Whether alternative remedy bars the Appellant, in cases, where the principles of natural justice has been violated?

Held:

The Hon’ble Chhattisgarh High Court in M/S MAHENDRA SPONGE AND POWER LIMITED VERSUS ASSISTANT COMMISSIONER STATE TAX (SGST) CIRCLE-9, RAIPUR  - 2023 (1) TMI 501 - CHHATTISGARH HIGH COURT has held as under:

• Observed that, the Appellant had prayed for an opportunity of hearing, which was not granted. Hence, if there is violation of principles of natural justice, alternative remedy cannot be an absolute bar to file a writ petition.
• Opined that, Irrespective of the fact as to whether the Appellant had filed reply or not, it is evident that the Appellant had prayed for a personal hearing, which was not granted. It would not be fair to direct the Appellant to avail the alternative remedy, as there is violation of the principles of natural justice.
• Held that, alternative remedy is not an absolute bar if there is violation of principles of natural justice.
• Quashed and set aside the order passed by the Single Judge as well as the Impugned Order.
• Directed the Respondent to pass appropriate order within a period of 45 days after granting the opportunity of hearing to the Appellant.
• Further directed that, no balance amount shall not be recovered from the appellant, till passing of such the order.

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