2025 (5) TMI 1608 - HC - GST

Availability of alternative statutory remedy of appeal - Deduction of tax at source - Imposition of tax along with interest and penalty - Non-supply of relied upon documents - Violation of principles of natural justice - mismatch between the total taxable turnover and the liability incurred by the petitioner - HELD THAT - At the outset it is to be indicated that the petitioner has a statutory remedy of appeal under Section 107 (1) of the TGST Act. The appeal can be preferred within a period of 90 days from the date of the order in original and delay if any can be condoned up to 30 days thereafter under Section 107 (4) of the Act of 2017. The allegation of non-supply of relied upon documents to the petitioner can be a facet of the principles of natural justice which is open for the petitioner to be raised in the appeal along with all other grounds of law and fact as are available to the petitioner. However on the face of it it cannot be said that the proceedings suffer from violation of principles of natural justice as the impugned order in original has been passed after issuance of proper show-cause notice and consideration of the reply of the petitioner. Thus we are not inclined to entertain the writ petitions on the ground of availability of alternative statutory remedy of appeal. We therefore refrain from making any observations on other grounds on merits which the petitioner may raise before the appellate forum. Hence the writ petitions are dismissed with liberty to the petitioner to approach the Appellate Authority in accordance with law.

Summary

1. ISSUES PRESENTED and CONSIDERED

- Whether the impugned orders passed under Section 73(1) of the Tripura State Goods and Service Tax Act, 2017 imposing tax, interest, and penalty on the petitioner for the financial years 2021-22, 2022-23, and 2023-24 are liable to be quashed on the ground of violation of principles of natural justice, specifically for non-supply of relied upon documents to the petitioner prior to passing the orders.

- Whether the petitioner is entitled to approach the High Court by way of writ petitions against the orders passed under the TGST Act, 2017, without exhausting the alternative statutory remedy of appeal under Section 107(1) of the Act.

- Whether the proceedings under Section 73(1) of the TGST Act, 2017, were conducted in accordance with the statutory requirements, including issuance of show-cause notices, consideration of the petitioner's replies, and affording personal hearing.

2. ISSUE-WISE DETAILED ANALYSIS

Issue 1: Alleged violation of principles of natural justice by non-supply of relied upon documents

Relevant legal framework and precedents: The principles of natural justice mandate that a person affected by an adverse order must be given a fair opportunity to know the case against him and to present his defense. This includes the right to receive relevant documents or evidence relied upon by the authority before passing the order. Under the TGST Act, 2017, proceedings under Section 73(1) involve issuance of show-cause notices and consideration of the taxpayer's replies before passing an order for recovery of tax, interest, and penalty.

Court's interpretation and reasoning: The Court observed that the impugned orders were passed after issuance of proper show-cause notices in Form GST DRC-01 and after considering the petitioner's replies, including personal hearings. The petitioner had been informed through Form GST ASMT-10 and responded via Form GST ASMT-11 before initiation of proceedings. Although the petitioner contended that non-supply of verification reports of tax deduction at source (TDS) data prevented him from adequately explaining the mismatch in declared turnover and tax liability, the Court held that this grievance could be addressed in the appellate proceedings. The Court did not find a prima facie violation of natural justice in the impugned orders as the petitioner was given opportunity to respond to the allegations and the orders were passed after due process.

Key evidence and findings: The petitioner's self-assessed returns (GSTR-3B and GSTR-1) showed tax deposits at rates lower than the scheduled 18% on manpower supply, which was compared with TDS data under Section 51 of the GST Act. The tax authorities scrutinized the returns, issued notices, and considered the petitioner's replies before passing the orders. The petitioner's claim of non-supply of TDS verification reports was not supported by any statutory requirement mandating such disclosure prior to order.

Application of law to facts: The Court applied the procedural safeguards under the TGST Act and the principles of natural justice, concluding that the petitioner was afforded adequate opportunity to defend himself. The absence of specific statutory obligation to supply TDS verification reports before order did not amount to violation of natural justice.

Treatment of competing arguments: The petitioner argued that non-supply of relied upon documents violated natural justice and warranted quashing of the orders. The State contended that the petitioner had statutory remedy of appeal and that the proceedings complied with procedural requirements. The Court favored the State's position, emphasizing the availability of appeal and the procedural compliance in the impugned orders.

Conclusions: The Court held that the alleged non-supply of verification reports or related documents did not constitute a violation of principles of natural justice sufficient to quash the orders in writ jurisdiction.

Issue 2: Maintainability of writ petitions in presence of alternative statutory remedy of appeal under Section 107(1) of the TGST Act, 2017

Relevant legal framework and precedents: Section 107(1) of the TGST Act provides a statutory remedy of appeal against orders passed under the Act, to be preferred within 90 days from the date of the order. Section 107(4) allows condonation of delay up to 30 days. The principle of exhaustion of alternative statutory remedies before invoking writ jurisdiction is well established in administrative law.

Court's interpretation and reasoning: The Court emphasized that the petitioner had a clear and efficacious remedy of appeal before the Appellate Authority under the TGST Act. The grounds raised in the writ petitions, including alleged violation of natural justice, could be agitated in the appeal. The Court observed that it was not inclined to entertain the writ petitions on the ground of availability of alternative remedy. The Court refrained from expressing any opinion on the merits of the case, leaving the petitioner free to raise all grounds before the appellate forum.

Key evidence and findings: The impugned orders were passed on 11.02.2025, and the petitioner had not availed the appeal remedy within the prescribed period. The statutory provisions allowed for delay condonation, which remained open to the petitioner.

Application of law to facts: The Court applied the principle that writ jurisdiction is discretionary and not a substitute for statutory appeal remedies. Since an effective alternative remedy existed, the writ petitions were not maintainable.

Treatment of competing arguments: The petitioner sought quashing of the orders by writ on grounds of natural justice violation. The State argued for dismissal on maintainability due to alternative remedy. The Court agreed with the State, underscoring the importance of following the statutory appellate process.

Conclusions: The writ petitions were dismissed on the ground of non-exhaustion of the statutory remedy of appeal under Section 107(1) of the TGST Act.

Issue 3: Compliance with procedural requirements under Section 73(1) of the TGST Act, 2017

Relevant legal framework and precedents: Section 73(1) of the TGST Act deals with determination of tax not paid or short paid or erroneously refunded or input tax credit wrongly availed or utilized. The procedure involves issuance of show-cause notice, consideration of the taxpayer's reply, and passing of order after personal hearing.

Court's interpretation and reasoning: The Court noted that the Superintendent of State Tax issued show-cause notices in Form GST DRC-01 after initial scrutiny and communication through Forms GST ASMT-10 and ASMT-11. The petitioner was given personal hearing before passing the orders. These procedural steps satisfied the statutory mandates.

Key evidence and findings: The record showed issuance of statutory notices, petitioner's replies, and personal hearing. The orders reflected consideration of the petitioner's submissions.

Application of law to facts: The Court found no procedural irregularity or non-compliance with Section 73(1) of the TGST Act in the impugned orders.

Treatment of competing arguments: The petitioner's contention of procedural unfairness was limited to non-supply of documents, which was addressed above. The State demonstrated compliance with statutory procedure.

Conclusions: The Court held that the proceedings under Section 73(1) were conducted in accordance with the statutory framework and procedural safeguards.

3. SIGNIFICANT HOLDINGS

- "On the face of it, it cannot be said that