Case Law Details
Northern East Water Tank Manufacturing Private Limited Vs Union of India & Ors. (Calcutta High Court)
The Calcutta High Court considered an appeal against an order of a Single Bench that had declined to entertain a writ petition under Article 226 of the Constitution on the ground that an alternative remedy was available under the Central Goods and Services Tax Act, 2017. The Single Bench had held that any order passed under the CGST Act could be challenged before the appellate authority under Section 107 of the Act and that the writ court should ordinarily be slow in exercising jurisdiction when an efficacious statutory remedy exists.
The Division Bench observed that the existence of an alternative statutory remedy does not create an absolute bar on the High Court’s jurisdiction under Article 226. The rule is one of discretion and not exclusion. It further noted that appellate courts should ordinarily be slow in interfering with discretionary orders refusing to entertain writ petitions unless such discretion has been exercised irrationally, unreasonably, or contrary to settled legal principles.
While initially not inclined to interfere with the Single Bench’s order, the Division Bench examined the reliefs sought in the writ petition and found that the petitioners had challenged the vires of paragraph 6 of Circular No. 31/05/2018-GST dated 09.02.2018, as amended by Circular No. 169/01/2022-GST dated 12.03.2022, on the ground that it was inconsistent with Sections 73 and 74 of the CGST Act, 2017.
The Court held that when the vires of a circular or subordinate legislation is challenged, that issue must be considered first. It observed that the appellate authority under Section 107 has the power to hear appeals against decisions or orders passed under the Act but does not possess jurisdiction to declare a statutory provision or statutory circular ultra vires either the parent legislation or the Constitution. Such power lies with the constitutional courts.
Accordingly, the Court held that the High Court ought not to have relegated the parties to a statutory authority that lacked the power to decide the challenge to the validity of the circular. The impugned order was therefore set aside, and the writ petition was remanded to the Single Bench for adjudication of the primary relief concerning the challenge to the vires of the circulars after providing an opportunity of hearing to all parties.
The Court also directed the appellant to serve a copy of the application upon the Deputy Solicitor General, noting that notice is required when the vires of a statutory provision is challenged. The appeal and connected applications were disposed of with these directions.
FULL TEXT OF THE JUDGMENT/ORDER OF CALCUTTA HIGH COURT
1.The instant appeal is taken up out of turn on the mentioning of the learned Advocate for the appellants. The impugned order passed by the Single Bench, which is assailed in the instant Mandamus Appeal, appears to have been passed refusing to exercise the discretion of entertaining the writ-petition under Article 226 of the Constitution of India on the ground of alternative remedy provided under Central Goods & Services Tax Act, 2017.
2. The Single Bench was of the view that the moment challenge is made to an order passed by the Authority under the aforesaid Act, such order is amenable to be challenged before the Appellate Authority under Section 107 of the said Act and, therefore, the moment the Court notices that an efficacious alternative remedy is available under the statute, the Writ Court should be slow and circumspect in exercising such discretion under Article 226 of the Constitution of India.
3. It is no doubt true that despite the existence of an alternative statutory remedy provided to an aggrieved person, there is no fetter on the part of the High Court to entertain the writ-petition under Article 226 of the Constitution of India. It is not an absolute rule that the powers enshrined under Article 226 of the Constitution of India upon the High Court, is taken away by virtue of the provision contained in the statute providing the remedy by way of an appeal. It is not a rule of exclusion but a rule of discretion.
4. The moment the Court refuses to exercise its discretion, the Appellate Court should be slow and circumspect in interfering with such decision provided the discretion appears to have been exercised irrationally, unreasonably and against the settled principles of law applicable in this regard. Furthermore, if the Court refuses to exercise the discretion, the Appellate Court should also be slow in interfering with such discretionary order.
5. At the first blush, we are not inclined to interfere with the impugned order as the Single Bench was of the view that there is an alternative efficacious remedy by way of an appeal provided in the said statute but our attention is drawn to the reliefs claimed in the writ-petition. It appears from the first relief claimed in the writ-petition that the petitioners apart from challenging several orders in the form of a Circular, have also challenged the vires of paragraph 6 of Circular No. 31/05/2018-GST dated 09.02.2018, as amended vide CBI&C Circular No. 169/01/2022-GST dated 12.03.2022, having offended with the provisions contained in Sections 73 and 74 of the CGST Act 2017.
6. It is no gainsaying that the moment the vires of the Circular or the statutory provision of the subordinate legislation is challenged, the first and foremost duty, which is required to be discharged, to consider and decide such issue before embarking the journey of determining other issues.
7. Section 107 of the said Act confers power of an appeal against any decision or order passed under this Act or the State Goods & Services Tax Act or the Union Territory Acts, Services Acts by the adjudicating authority which does not, in our opinion, confer any power or jurisdiction upon such appellate authority to declare any provision of the statute or the statutory circular to be ultra-vires to the parent Act or the Constitution. Such power is vested upon the Constitutional Court and, therefore, it is a paramount duty of the High Court to decide the said issue and should not have relegated the parties before the statutory authority which is denuded of such powers.
8. In such view of the matter, the impugned order is hereby set aside.
9. The writ-petition is remanded to the Single Bench to decide the primary relief where the vires of the circulars have been challenged after affording an opportunity of hearing to the respective parties.
10. It goes without saying that the moment the vires of the statutory provision is the subject matter of challenge in the writ-petition, notice is required to be given to the Deputy Solicitor General in the Circuit Bench and, therefore, we direct the appellant/petitioner to serve a copy of the instant application upon the Deputy Solicitor General immediately.
11. Liberty is granted to the parties to pray for listing of the instant writ-petition subject to the convenience of His Lordship.
12. With these observations, the appeal being MAT 1 of 2024 and the connected applications being CAN 1 of 2024 and CAN 2 of 2024 are disposed of.
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