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2025 (5) TMI 1980 - HC - GSTTerritorial jurisdiction - expression cause of action - Maintainability of writ petition due to availability of remedy of appeal under Section 107 of the CGST Act - Imposition of interest and penalty - availing the fake/bogus ITC - denial of cross-examination of witnesses - violation of the principle of natural justice - doctrine of forum conveniens - HELD THAT - So far as the territorial jurisdiction is concerned this issue is no more res integra. The Division Bench of this Court in the case of Shri govind Niranjan 2024 (11) TMI 1460 - MADHYA PRADESH HIGH COURT has held that the expression cause of action used in Clause (2) of Article 226 of the Constitution of India indisputably even if the small fraction thereof accrues within the jurisdiction of the Court the Court will have jurisdiction in the matter through the doctrine of forum conveniens may also have to be considered. The petitioner is having registration of GSIT as well as the place of business at Indore. The search was conducted in the office situated at Indore the materials in question were supplied and received in Indore therefore merely on the ground that the learned assessing authority who has passed the order in original is stationed at Bhopal it cannot be held that this Bench at Indore has no jurisdiction to entertain this writ petition. Since the authority is situated in Bhopal therefore in view of the judgment passed by the Division Bench of this Court in the case of Shri govind Niranjan (supra) the Principal Bench also has jurisdiction to entertain the writ petition. So far as the issue of maintainability of writ petition due to availability of remedy of appeal is concerned it is not in dispute that the writ petition is maintainable in certain circumstances like where there is complete lack of jurisdiction where vires of act / rules / notification has been challenged where an order has been passed in total violation of principle of natural justice etc. The petitioner is alleging the violation of principle of natural justice solely on the ground that the opportunity to cross-examine the witnesses was not given. The petitioner has failed to point out when the request was made for cross-examination of the witnesses. By not giving an opportunity to cross-examine the witnesses whether any prejudice was caused is liable to be examined by the appellate authority after examining the record and the relevancy of the deposition of the witnesses. The appellate authority would be competent to decide all the issues and grounds raised in the writ petition. There should not be an avoidance of pre-deposit condition for the entertainment of a statutory appeal. Thus all the Writ Petitions stand dismissed with liberty to the petitioner to approach the appellate authority.
1. ISSUES PRESENTED and CONSIDERED
The core legal questions considered by the Court in these writ petitions were: (a) Whether the writ petitions under Article 226 of the Constitution of India challenging the original order passed by the Additional Commissioner imposing recovery of Input Tax Credit (ITC), interest, and penalty are maintainable despite the availability of a statutory remedy of appeal under Section 107 of the Central Goods & Service Tax Act, 2017 (CGST Act). (b) Whether the principle of natural justice was violated in the impugned order, specifically with respect to the denial of cross-examination of witnesses relied upon by the tax authorities. (c) Whether the territorial jurisdiction of the Court at Indore was competent to entertain the writ petitions when the original order was passed by the Additional Commissioner at Bhopal. (d) The applicability and interpretation of relevant precedents concerning the maintainability of writ petitions against tax assessment orders and the necessity of exhausting statutory remedies before approaching the High Court under Article 226. 2. ISSUE-WISE DETAILED ANALYSIS (a) Maintainability of Writ Petition Despite Availability of Statutory Remedy Relevant Legal Framework and Precedents: Section 107 of the CGST Act provides a statutory remedy of appeal against orders passed under the Act. The principle of judicial prudence, as established by the Supreme Court, mandates that when efficacious statutory remedies are available, writ petitions under Article 226 should not ordinarily be entertained to bypass such remedies. This principle was reiterated in the Apex Court judgment in State of Maharashtra & Others v/s Greatship (India) Limited, which held that writ petitions challenging assessment orders should be relegated to statutory appeals. Court's Interpretation and Reasoning: The Court emphasized that the availability of an efficacious statutory appeal remedy under Section 107 precludes the maintainability of writ petitions challenging the assessment order, except in exceptional circumstances such as total lack of jurisdiction, challenge to the vires of the statute, or violation of natural justice. The Court found that the petitioner failed to demonstrate any such exceptional circumstance warranting bypass of the statutory appeal remedy. Key Evidence and Findings: The petitioner did not avail the remedy of appeal and instead approached the High Court directly by way of writ petition. The Court noted that the petitioner's attempt appeared to be motivated by an intent to avoid the pre-deposit condition of 10% of the tax under recovery. Application of Law to Facts: The Court applied the principle from Greatship (India) Limited, holding that the writ petition was not maintainable since the petitioner had an efficacious statutory remedy which was not exhausted. The Court reiterated that the appellate authority is competent to consider all grounds, including allegations of denial of natural justice. Treatment of Competing Arguments: While the petitioner relied on various precedents to contend that writ petitions are maintainable against original orders under Article 226, the Court distinguished those cases, emphasizing that the present facts did not demonstrate exceptional circumstances justifying bypassing the statutory appeal. Conclusion: The writ petitions were dismissed on the ground of non-maintainability due to availability of statutory appeal remedy. (b) Alleged Violation of Principle of Natural Justice Relevant Legal Framework and Precedents: The principle of natural justice requires that a party be given a fair opportunity to present its case, including the right to cross-examine witnesses whose evidence is relied upon. However, the denial of such opportunity must be shown to have caused prejudice. Court's Interpretation and Reasoning: The petitioner alleged that cross-examination of witnesses was denied. However, the Court observed that the petitioner failed to specify when such a request for cross-examination was made. The Court held that whether prejudice was caused by the denial of cross-examination is a matter for the appellate authority to examine after reviewing the record and the relevancy of the witness depositions. Key Evidence and Findings: The record did not indicate any formal request for cross-examination or demonstrate that denial of such opportunity caused prejudice to the petitioner's case. Application of Law to Facts: The Court opined that the appellate authority would be competent to consider this ground and that the petitioner should not avoid the pre-deposit condition by approaching the High Court prematurely. Treatment of Competing Arguments: The petitioner's contention that the order was passed in gross violation of the principle of natural justice was not accepted as sufficient to maintain the writ petition in the face of the statutory appeal remedy. Conclusion: The Court declined to entertain the natural justice plea at the writ stage and left it open for consideration by the appellate authority. (c) Territorial Jurisdiction of the Court Relevant Legal Framework and Precedents: The Division Bench of the Madhya Pradesh High Court in Shrigovind Niranjan & Others v/s The State of Madhya Pradesh & Others clarified that the expression 'cause of action' in Clause (2) of Article 226 allows the Court to exercise jurisdiction if any fraction of the cause of action arises within its territorial limits. The doctrine of forum conveniens may also be relevant. Court's Interpretation and Reasoning: The petitioner's place of business and GST registration was at Indore, and the search and supply of materials took place there. Although the assessing authority was located in Bhopal, the Court held that the Bench at Indore had jurisdiction to entertain the writ petitions. Key Evidence and Findings: The facts showed that significant events related to the cause of action occurred within Indore's jurisdiction. Application of Law to Facts: The Court applied the principle that even a small fraction of the cause of action arising within the Court's jurisdiction confers territorial competence to entertain the petition. Treatment of Competing Arguments: The respondents' contention that the Court at Indore lacked jurisdiction was rejected on the basis of the cited precedent. Conclusion: The Court confirmed its territorial jurisdiction to entertain the writ petitions. (d) Interpretation of Precedents on Maintainability of Writ Petitions Relevant Legal Framework and Precedents: The petitioner relied on several precedents to argue for maintainability of writ petitions against original orders, including Bharat Mint & Allied Chemicals, Andaman Timber Industries, Century Textile & Ind. Limited, Nishad K.U., D.Y. Beathel Enterprises, Titan Company Limited, Joint Commissioner (Intelligence & Enforcement) v/s M/s Lakshmi Mobile Accessories, and M/s Ace Cardiopathy Solutions Private Limited. The respondents relied primarily on Greatship (India) Limited and Shrigovind Niranjan. Court's Interpretation and Reasoning: The Court acknowledged the precedents but emphasized that the principle established by the Supreme Court in Greatship (India) Limited is binding and authoritative, requiring exhaustion of statutory remedies before invoking writ jurisdiction. The Court noted that the petitioner's reliance on earlier judgments did not override the binding precedent of Greatship. Key Evidence and Findings: The Court found that the petitioner's case did not fall within the exceptions that justify bypassing the statutory appeal remedy. Application of Law to Facts: The Court applied the binding precedent to dismiss the writ petitions and directed the petitioner to avail the statutory appeal remedy. Treatment of Competing Arguments: The Court balanced the precedents and gave primacy to the Apex Court's ruling in Greatship, thereby overruling the petitioner's reliance on other judgments. Conclusion: The Court held that the writ petitions were not maintainable and must be dismissed in light of the binding precedent. 3. SIGNIFICANT HOLDINGS The Court made the following crucial legal determinations: "The High Court has seriously erred in entertaining the writ petition under Article 226 of the Constitution of India against the assessment order, bypassing the statutory remedies." "When there is an alternate remedy available, judicial prudence demands that the court refrain from exercising its jurisdiction under constitutional provisions." "The petitioner has failed to point out when the request was made for cross-examination of the witnesses. By not giving an opportunity to cross-examine the witnesses, whether any prejudice was caused, is liable to be examined by the appellate authority after examining the record and the relevancy of the deposition of the witnesses." "The expression 'cause of action' used in Clause (2) of Article 226 of the Constitution of India indisputably even if the small fraction thereof accrues within the jurisdiction of the Court, the Court will have jurisdiction in the matter." Accordingly, the Court dismissed all the writ petitions with liberty to the petitioner to approach the appellate authority under Section 107 of the CGST Act, reiterating that the appellate authority shall decide the appeal on merits without raising limitation issues, subject to fulfillment of other statutory conditions.
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