Writ Petition Challenging GST Assessment Dismissed; Assessee Relegated to Statutory Remedy

Issue: Whether a writ petition is maintainable against a GST assessment order passed under Section 74 (involving fraud) when an alternate statutory remedy of appeal is available.

Facts:

The assessee, a provider of tour packages, classified themselves as a ‘tour operator’ for GST purposes.
A show cause notice was issued, alleging that the assessee should have classified themselves as a ‘houseboat service operator’, attracting a higher GST rate.
An assessment order was passed under Section 74, which deals with cases involving fraud, misstatement, or suppression of facts.
The assessee argued that there was no fraud involved and that the assessment under Section 74 was unjustified.

Decision:

The court noted that the impugned order contained specific reasons for invoking Section 74.
The court emphasized that the normal remedy against an order passed under Section 74 is to file an appeal under Section 107 of the GST Act.
The court held that there was no merit in exercising writ jurisdiction under Article 226 of the Constitution when an alternate statutory remedy was available.
The writ petition was dismissed, and the assessee was directed to pursue the statutory remedy of appeal.

Key Takeaways:

This case clarifies that when an alternate remedy of appeal is available against a GST assessment order, even under Section 74, a writ petition is generally not maintainable.
Assessees should exhaust the available statutory remedies before approaching the High Court through a writ petition.
This decision reinforces the principle that writ jurisdiction is extraordinary and should be exercised only in exceptional circumstances where no other effective remedy is available.

HIGH COURT OF KERALA

Neo Classic Cruise and Tours (P.) Ltd.

Deputy Commissioner (Intelligence)

Bechu Kurian Thomas, J.

WP(C) NO. 1602 OF 2025

JANUARY 16, 2025

K.J. Abraham, Aravindakshan K.R., and Nikhil John, Advs. for the Petitioner. Jasmin M.M., Government Pleader, for the Respondent.

JUDGMENT

Petitioner challenges Exhibit-P5 order issued under Section 74 of the Central Goods and Services Tax Act, 2017 (for short, ‘the Act’).

2. Petitioner is a company engaged in providing tour packages like breakfast cruises, lunch and dinner cruises through the back waters. Various specialised packages are also offered by the petitioner. While classifying the services, petitioner classified itself as a tour operator. However, a show cause notice was issued on 29.07.2024, alleging that the petitioner ought to have classified itself as a ‘houseboat service operator’ taxable at the rate of 18% and had instead classified itself as a tour operator to be taxed at the rate of 5%. It was alleged that the said suppression was revealed only through an investigation. Consequent to a detailed objection filed by the petitioner as Exhibit-P2, the impugned order was issued under Section 74 of the Act, which is produced as Exhibit-P5.

3. Sri. Abraham K.J., the learned counsel for the petitioner, vehemently contended that neither the show cause notice nor the impugned order reflect any circumstance for initiating proceedings under Section 74 of the Act, as there is no fraud, willful misstatement or suppression. It was also submitted that Section 74 of the Act has been invoked solely for the purpose of avoiding the restriction on the period of limitation, and there is nothing to indicate any fraud, willful misstatement or suppression. It was further submitted that, the impugned order was passed without verifying the records and has proceeded in a unilateral manner, thereby violating the principles of natural justice.

4. Smt. Jasmin M.M., the learned Government Pleader, on the other hand, contended that the impugned order is appealable under Section 107 of the Act. It was also submitted that considering the specific factual findings of the assessing authority in the impugned order at paragraph 8 indicating the reasons for invoking of Section 74 of the Act, this Court ought not to exercise the jurisdiction under Article 226 of the Constitution of India.

5. On a consideration of the rival contentions, this Court notices that the impugned order refers to specific reasons for invoking the powers under Section 74 of the Act. The correctness or otherwise of those reasons cannot be gone into in this proceeding under Article 226 of the Constitution of India, as those are disputed facts. The normal remedy for an aggrieved person against an order issued under Section 74 of the Act is to prefer an appeal under Section 107 of the Act.

6. Though the learned counsel for the petitioner vehemently relied upon instruction No.05/2023 issued by the Central Board of Indirect Taxes & Customs, which indicates that proceedings under Section 74 of the Act can be invoked only when there is fraud, willful misstatement or suppression of facts to evade tax. Bearing in mind the Explanation to Section 74, I am of the view that the contentions now urged are matters which will have to be agitated in an appeal provided under the statute and not take recourse to the extraordinary remedy under Article 226 of the Constitution of India.

7. In such circumstances, I find no merit to exercise the jurisdiction under Article 226 of the Constitution of India and relegate the petitioner to pursue his statutory remedies.

The writ petition is dismissed with the above observations.