Writ Appeals Dismissed for Non-Exhaustion of Alternate Remedy of Appeal in GST

Summary in Key Points:

Issue: Whether writ jurisdiction can be invoked to challenge a GST order when an alternate remedy of appeal is available under the GST Act.
Facts: The appellant-assessee filed writ petitions challenging an order passed by a GST officer, arguing that the officer lacked the authority to pass the order. The writ court dismissed the petitions, citing the availability of an alternate remedy of appeal. The appellant then filed writ appeals, seeking to bypass the appellate process due to the requirement of depositing tax to file an appeal.
Decision: The High Court dismissed the writ appeals, holding that the appellant should pursue the alternate remedy of appeal, even if it involves depositing tax. The court emphasized that writ jurisdiction should be exercised only in the absence of an effective alternative remedy.

Decision:

The High Court upheld the writ court’s decision and dismissed the writ appeals. The court clarified the following:

Alternate Remedy: Section 107 of the GST Act provides an effective alternate remedy of appeal against the impugned order.
Writ Jurisdiction: Writ jurisdiction under Article 226 of the Constitution should be exercised only when there is no alternative remedy available.
Deposit of Tax: The requirement to deposit tax as a condition for filing an appeal does not invalidate the appellate remedy or justify bypassing it.
Appellate Authority’s Jurisdiction: The appellate authority has the jurisdiction to determine whether the officer who passed the order was a ‘proper officer’ under the GST Act.

Important Note: This case reinforces the principle of exhausting alternate remedies before invoking writ jurisdiction. The High Court’s decision emphasizes that the existence of an appellate remedy, even with conditions like tax deposit, does not justify bypassing the statutory appeal process. This ensures that the specialized appellate authorities under the GST Act have the first opportunity to examine and adjudicate upon the issues in dispute.

HIGH COURT OF MADRAS

Abhinaya Constructions

State of Tamil Nadu

R. Subramanian AND L. Victoria Gowri, JJ.

WrIT Appeal (MD) Nos.1209 and 1212 to 1216 of 2024
C.M.P.(MD) Nos.9294, 9296, 9297, 9298, 9300 & 9302 of 2024

DECEMBER 20, 2024

J.V. Niranjan, for the Appellant., R. Sureshkumar, Additional Government Pleader for the Respondent.

JUDGMENT

R. Subramanian, J.- The appellant in all these appeals is aggrieved by the common order of the Writ Court, wherein, the Writ Court refused to entertain the writ petitions, in view of the alternative remedy that is available under Section 107 of the Tamil Nadu Goods and Services Tax Act, 2017 [for brevity ‘the Act’].

2. The challenge in the Writ Petitions was to the order of the State Tax Officer, Divisional Central Investigating Wing – 2 dated 30.08.2023, in and by which, the Officer passed an order under Section 74 of the Tamil Nadu Goods and Services Tax Act, 2017 determining the tax payable by the appellant.

3. The challenge was mainly on the ground that the Officer who had passed the order is not empowered to pass the order, since, he would not fall within the definition of the term ‘Adjudicating Authority’ under Section 2(4) of the Tamil Nadu Goods and Services Tax Act, 2017.

4. The writ Court however held that the submission of the learned counsel is contrary to the scheme of the Tamil Nadu Goods and Services Tax Act, 2017, inasmuch as the assessment has to be completed by a Proper Officer and it is open for the Commissioner to designate any such Officer as a Proper Officer as defined under Section 2(91) of the Tamil Nadu Goods and Services Tax Act, 2017 and therefore, delegation in terms of Notification No.4 of 2017 issued under Section 5(1) of the Tamil Nadu Goods and Services Tax Act, 2017, appointing Proper Officers is proper and the said submission does not deserve consideration.

5. Aggrieved the appellant is on appeal.

6. We have heard Mr.J.V.Niranjan, learned counsel for M/s.Niranjan Associates, appearing for the appellant and Mr.R. Suresh Kumar, learned Additional Government Pleader appearing for the respondents Department.

7. Section 2(4) of the Tamil Nadu Goods and Services Tax Act, 2017 defines the “Adjudicating Authority” and it reads as follows:-

(4) “adjudicating authority” means any authority, appointed or authorised to pass any order or decision under this Act, but does not include the Commissioner, Revisional Authority, the Authority for Advance Ruling, the Appellate Authority for Advance Ruling, 1[the appellate Authority, the Appellate Tribunal and the Authority referred to in sub-section (2) of section 171];

8. Section 2(91) defines the term “Proper Officer” and the same reads as follows:-

(91) “proper officer” in relation to any function to be performed under this Act, means the Commissioner or the officer of the State tax who is assigned that function by the Commissioner;

9. Section 5 defines the “Powers of Officers” and it reads as follows:-

5. Powers of officers.- (1) Subject to such conditions and limitations as the Commissioner may impose, an officer of State tax may exercise the powers and discharge the duties conferred or imposed on him under this Act.

(2) An officer of State tax may exercise the powers and discharge the duties conferred or imposed under this Act on any other officer of State tax who is subordinate to him.

(3) The Commissioner may, subject to such conditions and limitations as may be specified in this behalf by him, delegate his powers to any other officer who is subordinate to him.

(4) Notwithstanding anything contained in this section, an Appellate Authority shall not exercise the powers and discharge the duties conferred or imposed on any other officer of State tax.

10. Section 74 enables the Proper Officer to issue show cause notice to an assessee, if it appears to him or her, that any tax has not been paid or short paid or erroneously refunded or where input tax credit has been wrongly availed or utilized by reason of fraud, or any wilful misstatement or any like reason to issue a show cause notice as to why he should not be directed to pay the amount along with interest and penalty and Section 74(9) enables the Proper Officer to determine the amount of tax payable and issue an order.

11. As pointed out by the writ Court, Section 107 of the Tamil Nadu Goods and Services Tax Act, 2017 provides for an appeal against the order made under Section 74 of the Act. Sub-Section 6 of Section 107 lays down certain conditions as to the payment of the tax determined for filing an appeal. Evidently, in order to bye-pass the appellate remedy, which requires payment of the tax, interest, fine, fee and penalty arising from the order impugned in the appeal to be paid, the appellant has chosen to invoke the remedy under Article 226 of the Constitution of India on an argument that the Commissioner had no authority to delegate the power to the 3^rd respondent to pass the impugned order.

12. No doubt, the writ Court has over ruled the objection on the ground that a reading of sub-Section 91 of Section 2 and Section 5 of the Act would show that the Act empowers the Commissioner to authorise any Officer to be the Proper Officer.

13. Of course, the learned counsel would attempt to argue that the authorisation, by the Commissioner, of the 3^rd respondent as a Proper Officer, is not in accordance with law and therefore the learned Single Judge was in error in accepting the contention of the Department that the authorization is proper.

14. No doubt, the remedy under Article 226 of the Constitution of India is available to every citizen and no legislation can put fetters on exercise of power by the High Court under Article 226 of the Constitution of India. However, it has to be borne in mind that a Constitutional remedy can be exercised by a Court only in the absence of alternative remedy under the relevant statute or only when the Court comes to a conclusion that such alternative remedy is ineffective. Merely because the alternative remedy requires compliance with certain conditions, the High Court cannot exercise the jurisdiction under Article 226 of the Constitution of India.

15. The contention of the learned counsel that the authorisation by the Commissioner, in the case on hand, itself is flawed can be gone into by the appellate Authority. It is not as if the appellate Authority has no jurisdiction to decide the question. The only difficulty that has driven the petitioner to the High Court invoking Article 226 of the Constitution of India is the condition relating to deposit found in sub-Section 6 of Section 107 of the Act.

16. We are afraid, that by itself cannot be a ground to entertain the Writ Petition under Article 226 of the Constitution of India. The condition requiring deposit of the entire tax payable may appear to be onerous, but, the enactment involved is taxing statute and therefore we cannot go by the onerousness or otherwise of the condition imposed.

Once it is found that there is effective alternative remedy, as the matter of self-imposed restriction and judicial discipline, the High Court will have to necessarily direct the parties to invoke such alternative remedy instead of the constitutional remedy. We hasten to add that the constitutional remedy at times may prove to be a very ineffective remedy, as the constitutional Courts cannot go into the nitty-gritty of the facts and decide on the quantum of tax that is levied or the correctness of the levy.

17. We are therefore constrained to conclude that the writ Court was justified in refusing to exercise jurisdiction and directing the appellant to avail of the statutory remedy by way of appeal under Section 107 of the Act. We therefore find no merits in the appeals, the appeals are therefore dismissed. However, considering the fact that the appellant has been agitating the matter before the High Court, we grant eight (8) weeks time to the appellant to file appeals against the orders impugned in the Writ Petitions and if such appeals are filed within eight weeks, the appellate Authority will entertain the same without reference to the question of limitation and dispose of the same on merits in accordance with law. We make it clear that the question relating to validity of the authorization raised by the appellant is also left open to be decided by the Authority concerned.

18. In view of the above all the Writ Appeals are dismissed confirming the order of the Writ Court. No costs. Consequently, the connected miscellaneous petitions are closed.