Writ petition challenging a single SCN for multiple years under Section 74 is dismissed, alternate remedy (appeal) exists

Writ petition challenging a single SCN for multiple years under Section 74 is dismissed as an efficacious alternate remedy (appeal) exists and the assessee did not challenge the SCN initially.

Issue:

Whether a writ petition challenging a show cause notice (SCN) and a subsequent final order issued under Section 74 of the Central Goods and Services Tax Act, 2017 (CGST Act, 2017), should be entertained on the ground that the SCN combined multiple tax years, especially when the assessee has an efficacious alternate remedy of appeal and did not challenge the SCN at the first instance.

Facts:

• A show cause notice was issued to the assessee under Section 74 of the CGST/WGST Act, 2017 (which deals with demands involving fraud, willful misstatement, or suppression of facts).
• A final order was subsequently passed based on this SCN.
• The assessee challenged this SCN and the final order in a writ petition, arguing that the SCN was flawed because it sought to combine multiple tax years into a single notice.
• The assessee, however, did not challenge the SCN when it was initially issued.

Decision:

The court ruled in favor of the revenue. It held that in view of the fact that the assessee had an efficacious alternate remedy (appeal under Section 107 of the CGST/WGST Act, 2017), all issues that the assessee sought to raise could be decided by the Appellate Authority. The court found no scope to entertain the writ petition, especially considering that the assessee did not challenge the SCN at the first instance after it was issued. The writ petition failed and was accordingly dismissed.

Key Takeaways:

• Alternate Remedy Rule: This case strongly reiterates the principle that writ jurisdiction (under Article 226 of the Constitution) is an extraordinary remedy and is generally not exercised when an equally efficacious alternate statutory remedy is available. The appeal mechanism under Section 107 of the CGST Act is considered an effective remedy to challenge both procedural flaws and the merits of a demand order.
• Scope of Appeal: The Appellate Authority (under Section 107) is competent to address various issues, including procedural challenges to the SCN (like combining multiple tax years), as well as the substantive merits of the demand.
• Failure to Challenge at Initial Stage: The assessee’s failure to challenge the SCN itself when it was first issued (e.g., by filing a reply raising the procedural defect or challenging it via writ at that stage) weakens their position to seek writ relief after the final order is passed. This suggests acquiescence to the procedure at an earlier stage.
• No Fundamental Violation: While combining multiple years in an SCN might be a procedural irregularity, it is not always considered a fundamental violation of natural justice or jurisdiction that would warrant immediate writ intervention, especially if the assessee had an opportunity to participate in the proceedings and then appeal. The court implies that such procedural issues can be adequately addressed in appeal.
• Section 74 vs. Section 73: While the specific section (74, involving fraud) implies a more serious default, the core principle of alternate remedy remains applicable unless a clear jurisdictional defect or gross violation of natural justice is established that cannot be remedied by appeal.