2025 (6) TMI 1148 - HC - GST

Validity of bank attachment - mandate of providing the DRC-07 before passing the Order-in-Original - case of petitioner is that since DRC-07 has not been issued before passing the Order-in-Original there is no need to challenge the Order-in-Original - HELD THAT - In absence of challenging the Order-in-Original no case is made out for interference. It is declined ot interfere for yet another reason. The Order-in-Original was issued on 06.01.2022. No appeal was preferred. The writ petition is also not filed within the stipulated time limit prescribed for preferring the appeal. The Supreme Court in Assistant Commissioner (CT) LTU Kakinada v. Glaxo Smith Kline Consumer Health Care Ltd 2020 (5) TMI 149 - SUPREME COURT has opined that The High Court may accede to such a challenge and can also nonsuit the petitioner on the ground that alternative efficacious remedy is available and that be invoked by the writ petitioner. However if the writ petitioner choses to approach the High Court after expiry of the maximum limitation period of 60 days prescribed under Section 31 of the 2005 Act the High Court cannot disregard the statutory period for redressal of the grievance and entertain the writ petition of such a party as a matter of course. C onclusion - In absence of any challenge to the Order-in-Original within the prescribed time and given the availability of alternative remedies the writ petition is dismissed and no interference is made with the bank attachment founded upon the Order-in-Original. Admission is declined and the writ petition is dismissed.

Summary

1. ISSUES PRESENTED and CONSIDERED

The core legal questions considered by the Court were:

• Whether the failure to provide the DRC-07 form prior to passing the Order-in-Original renders the Order-in-Original and subsequent bank attachment invalid or liable to interference without challenging the Order-in-Original itself.
• Whether an order, even if alleged to be void or defective, can be disregarded by a party without resorting to appropriate legal proceedings to challenge or set aside such order.
• Whether the delay in filing the writ petition and failure to prefer an appeal within the prescribed time against the Order-in-Original warrants dismissal of the writ petition on grounds of limitation and availability of alternate remedies.

2. ISSUE-WISE DETAILED ANALYSIS

Issue 1: Validity and Consequences of Non-issuance of DRC-07 Prior to Order-in-Original

Relevant legal framework and precedents: The DRC-07 form is a procedural requirement under the GST regime, intended to provide an opportunity to the assessee before passing an Order-in-Original. The petitioner contended that the failure to issue DRC-07 before the Order-in-Original dated 06.01.2022 rendered the order defective and the consequent bank attachment invalid.

Court's interpretation and reasoning: The Court noted the respondent's stand that the DRC-07 was uploaded on the portal on 27.06.2023, post the Order-in-Original. The Court held that even if the order was defective due to procedural lapses, the petitioner cannot ignore the validity of the Order-in-Original without legally challenging it. The Court relied on authoritative Supreme Court precedents emphasizing that an order, even if void or voidable, remains effective until set aside by a competent forum.

Key evidence and findings: The respondents produced a photocopy of the GST portal showing the uploading of DRC-07 on 27.06.2023, which contradicted the petitioner's claim that it was issued only on 24.09.2024. The Court found no merit in the petitioner's attempt to bypass challenging the Order-in-Original itself.

Application of law to facts: The Court applied settled legal principles that procedural irregularities or defects in an order do not render it null and void automatically. The petitioner was required to assail the Order-in-Original through appropriate legal remedies such as appeal or writ petition within the prescribed period.

Treatment of competing arguments: The petitioner argued that since DRC-07 was not issued before the Order-in-Original, the order and consequent bank attachment were liable to be quashed without challenging the order. The Court rejected this, holding that the petitioner cannot unilaterally declare an order void and must seek judicial intervention.

Conclusions: The Court concluded that failure to provide DRC-07 prior to the Order-in-Original does not automatically invalidate the order or subsequent actions founded on it unless challenged in appropriate proceedings.

Issue 2: Legal Consequences of Not Challenging a Potentially Void or Defective Order

Relevant legal framework and precedents: The Court extensively relied on Supreme Court decisions including Robust Hotels (P) Ltd. v. EIH Ltd., Krishnadevi Malchand Kamathia v. Bombay Environmental Action Group, State of Kerala v. M.K.Kunhikannan Nambiar Manjeri Manikoth, and Shiv Chander Kapoor v. Amar Bose. These authorities establish that even void or voidable orders are presumed valid until set aside by a competent court and cannot be disregarded by parties on their own.

Court's interpretation and reasoning: The Court reiterated the principle that "an order, even if not made in good faith, is still an act capable of legal consequences" and that "it bears no brand of invalidity upon its forehead." The Court emphasized that parties aggrieved by an order's invalidity must seek appropriate legal remedies to have it declared void or quashed, failing which the order remains binding and effective.

Key evidence and findings: The Court noted the petitioner's failure to initiate any appeal or challenge against the Order-in-Original within the prescribed time, despite the order being the foundation for the bank attachment.

Application of law to facts: The Court applied the above legal principles to hold that the petitioner's failure to challenge the Order-in-Original precluded any interference with the bank attachment or the order itself. The petitioner's unilateral assessment of the order's invalidity was legally impermissible.

Treatment of competing arguments: The petitioner's argument that the order was defective due to non-issuance of DRC-07 and hence no need to challenge the order was rejected. The Court emphasized that the remedy lies in challenging the order, not ignoring it.

Conclusions: The Court held that even if the order was void or defective, it remains effective until set aside by a competent court, and the petitioner's failure to challenge it barred interference.

Issue 3: Effect of Delay and Non-Exercise of Alternative Remedies on Entertaining Writ Petition

Relevant legal framework and precedents: The Court referred to the Supreme Court decision in Assistant Commissioner (CT) LTU, Kakinada v. Glaxo Smith Kline Consumer Health Care Ltd., which clarified that statutory limitation periods prescribed for appeal or revision cannot be disregarded by High Courts while entertaining writ petitions under Articles 226 and 227 of the Constitution. The Court also noted that alternative efficacious remedies must be invoked within the prescribed time.

Court's interpretation and reasoning: The Court observed that the Order-in-Original was passed on 06.01.2022, but no appeal was preferred within the statutory period of 60 days. The writ petition filed on 18.09.2024 was well beyond the limitation period. The Court held that the High Court cannot entertain a writ petition as a matter of course after expiry of the statutory limitation, especially when alternative remedies were available.

Key evidence and findings: The timeline of events showed a clear delay in approaching the Court, with no explanation for the delay or justification for bypassing the statutory appeal mechanism.

Application of law to facts: The Court applied the principle that limitation periods are mandatory and that delay in invoking statutory remedies cannot be condoned by entertaining belated writ petitions.

Treatment of competing arguments: The petitioner did not provide any substantial reason for delay or failure to prefer appeal. The Court rejected any attempt to circumvent statutory remedies through belated writ petitions.

Conclusions: The Court declined to entertain the writ petition due to delay and non-exercise of alternative remedies within the prescribed time.

3. SIGNIFICANT HOLDINGS

The Court laid down the following crucial legal principles and conclusions:

• "It is not open either to a party to the lis or to any third party to determine at their own that an order passed by a court is valid or void. A party to the lis or the third party who considers an order passed by a court as voidable or non est, must approach the court of competent jurisdiction to have the said order set aside on such grounds, as may be available in law..."
• "An order, even if not made in good faith, is still an act capable of legal consequences. It bears no brand of invalidity upon its forehead. Unless the necessary proceedings are taken at law to establish the cause of invalidity and to get it quashed or otherwise upset, it will remain as effective for its ostensible purpose as the most impeccable of orders."
• "If an act or decision, or an order or other instrument is invalid, it should, in principle, be null and void for all purposes; and it has been said that there are no degrees of nullity. Even though such an act is wrong and lacking in jurisdiction, however, it subsists and remains fully effective unless and until it is set aside by a court of competent jurisdiction. Until its validity is challenged, its legality is preserved."
• The Court emphasized that statutory limitation periods for preferring appeals or other remedies cannot be ignored by High Courts while entertaining writ petitions, and delay in approaching the Court after expiry of limitation bars relief.
• Final determination: In absence of any challenge to the Order-in-Original within the prescribed time and given the availability of alternative remedies, the writ petition was dismissed and no interference was made with the bank attachment founded upon the Order-in-Original.