2025 (7) TMI 272 - HC - GST

Maintainability of petition - petition dismissed on the ground that an effective alternate remedy is available to the appellant as against the order of adjudication passed by the adjudicating authority by filing an appeal before the Commissioner Central Tax (Appeal) - HELD THAT - It is well settled that the rule of not entertaining an application under Article 226 of the Constitution of India when a statutory appellate remedy is available is not rigid rule but an exception can be curbed out for the said rule and the Hon ble Supreme Court in several decisions have curbed out such exceptions. It is not in dispute that the appellant was given adequate opportunity to put forth its submissions even prior to the show cause notice when statements were recorded and after the show cause notice was issued reply was submitted and the matter was adjudicated following the provisions under the Act - it cannot be stated to be a case where there has been violation of principles of natural justice. There are no grounds to interfere with the order passed by the learned Single Bench - appeal dismissed.

Summary

1. ISSUES PRESENTED and CONSIDERED

The core legal questions considered by the Court are:

- Whether the writ petition under Article 226 of the Constitution of India is maintainable when an effective statutory appellate remedy exists under the relevant taxation statute.

- Whether any exception to the general rule of not entertaining writ petitions in presence of an alternate remedy applies in the instant case, specifically:

• Whether there has been violation of principles of natural justice in the adjudication process;
• Whether the adjudicating authority lacked jurisdiction to issue the show cause notice or pass the adjudication order;
• Whether the order of adjudication is devoid of reasons or passed without application of mind;

- Whether the issues raised involve disputed questions of fact that require adjudication by the statutory appellate authority rather than the writ court.

- Whether the statutory appellate remedy is efficacious and effective or whether it can be bypassed in the present circumstances.

2. ISSUE-WISE DETAILED ANALYSIS

Issue 1: Maintainability of Writ Petition in Presence of Statutory Appellate Remedy

Relevant Legal Framework and Precedents: It is a well-settled principle that writ petitions under Article 226 are generally not entertained if an effective alternate statutory remedy exists. However, this rule is not rigid and exceptions have been carved out by the Hon'ble Supreme Court in various decisions where the alternate remedy is inadequate, ineffective, or where the case involves violation of fundamental rights or jurisdictional errors.

Court's Interpretation and Reasoning: The Court reiterated this principle and examined whether the facts of the case fall within any such exception. It emphasized that the statutory appellate remedy under the relevant taxation statute (filing an appeal before the Commissioner, Central Tax (Appeal)) is available and effective.

Application of Law to Facts: The Court found that the appellant was given adequate opportunity to present submissions during the adjudication process, including prior to issuance of the show cause notice and after. The appellant's grievance did not involve denial of natural justice or jurisdictional defects but related to disputed factual issues and allegations of fraud and mis-statement.

Treatment of Competing Arguments: The appellant argued for bypassing the statutory remedy and approaching the writ court directly. The Court rejected this, holding that the statutory remedy cannot be deemed ineffective or non-efficacious in the circumstances.

Conclusion: The writ petition is not maintainable as the statutory appellate remedy is available and effective.

Issue 2: Applicability of Exceptions to Rule of Alternate Remedy

Relevant Legal Framework and Precedents: The exceptions generally recognized include cases of violation of natural justice, lack of jurisdiction, and orders devoid of reasons or passed without application of mind.

Court's Interpretation and Reasoning: The Court examined each exception:

• Natural justice: The appellant had ample opportunity to be heard; hence no violation.
• Jurisdiction: The appellant did not challenge jurisdiction in a substantive manner but only on facts; thus, no jurisdictional defect.
• Reasoned order: The adjudication order was lengthy and detailed, considering all aspects; it was not a non-reasoned order.

Application of Law to Facts: None of the exceptions applied to the present case.

Conclusion: No exception to the rule against entertaining writ petitions in presence of alternate remedy is applicable.

Issue 3: Nature of Disputed Issues and Need for Adjudication by Statutory Authority

Relevant Legal Framework and Precedents: Writ courts generally do not decide disputed questions of fact which require detailed adjudication and evidence evaluation, especially in taxation matters where specialized authorities exist.

Court's Interpretation and Reasoning: The Court noted that the issues raised involved allegations of fraud, mis-statement, and wrongful availment of input tax credit, which are complex factual matters requiring detailed inquiry.

Application of Law to Facts: The appellant must pursue the statutory appellate remedy for adjudication of such disputed facts.

Conclusion: The writ court is not the appropriate forum for deciding these factual disputes.

Issue 4: Efficacy and Effectiveness of Statutory Appellate Remedy

Relevant Legal Framework and Precedents: The hierarchy of remedies under taxation statutes is designed to be efficacious and effective, and only in exceptional circumstances can the statutory remedy be bypassed.

Court's Interpretation and Reasoning: The Court found no exceptional circumstances in the present case to justify bypassing the statutory appellate remedy.

Application of Law to Facts: The appellant was directed to file the statutory appeal within 30 days, and the appellate authority was directed to consider the appeal on merits without dismissing it on limitation grounds, affording a fair hearing.

Conclusion: The statutory remedy is effective and must be pursued.

3. SIGNIFICANT HOLDINGS

- "It is well settled that the rule of not entertaining an application under Article 226 of the Constitution of India when a statutory appellate remedy is available is not rigid rule but an exception can be curbed out for the said rule and the Hon'ble Supreme Court in several decisions have curbed out such exceptions."

- "The order of adjudication is a very lengthy order considering all aspects of the matter and, therefore, cannot be stated to be an order, devoid of reasons or passed the nonapplication of mind."

- "The issues which have been canvassed in the writ petition as well as before us all requires adjudication into disputed questions of fact."

- "The matter concerning levy of tax, only in exceptional circumstances the assessee can be permitted to bypass the statutory remedy as the hierarchy of the remedies available under the relevant taxation statute are always efficacious and effective."

- The Court directed: "The appellant is directed to file a statutory appeal before the Commissioner, Central Tax (Appeal) after complying with the conditions within a period of 30 days from the date of receipt of server copy of this order."

- Further, "If such appeal is filed, the appellate authority shall not dismiss the appeal on the ground of limitation but consider the same on merits and in accordance with law after affording opportunity of hearing either virtual or physical to the authorized representative of the appellant."

These holdings establish that the availability of an effective statutory remedy bars the exercise of writ jurisdiction except in exceptional cases which are not present here; detailed factual disputes must be resolved by the statutory appellate authority; and that procedural safeguards must be afforded in the appellate process.