Case Law Details
Prem Motors Pvt. Ltd. Vs Union India India And Others (Madhya Pradesh High Court)
In the case of Prem Motors Pvt. Ltd. vs Union of India & Others, the Madhya Pradesh High Court addressed a dispute concerning discrepancies in GST turnover for the financial year 2017-2018. The petitioner, Prem Motors Pvt. Ltd., reported a mismatch between its annual return (Form GSTR-9) and its reconciliation statement (Form GSTR-9C), resulting in an un-reconciled turnover of ₹80.41 crores. The Additional Commissioner, CGST, issued a notice under Section 74 of the CGST Act, 2017, demanding tax, interest, and penalties totaling ₹40.24 crores. The petitioner contended that the inclusion of GST in the turnover was an error and claimed inadequate opportunity for a personal hearing, arguing that the order violated principles of natural justice under Section 75(4) of the CGST Act.
The High Court dismissed the petition, emphasizing the availability of an alternative appellate remedy under Section 107 of the CGST Act. It noted that the petitioner could appeal the decision but would need to deposit 10% of the disputed amount. The Court stated that discrepancies in financial data and supporting documents should be examined by the appellate authority, not the writ court. The decision also referenced Supreme Court rulings, underscoring that writ petitions under Article 226 are typically not entertained unless there are exceptional circumstances like fundamental rights violations or procedural lapses. Consequently, the Court dismissed the petition but granted liberty to the petitioner to pursue statutory remedies.
This ruling reiterates the importance of adhering to statutory appellate processes and highlights the judiciary’s reluctance to bypass these mechanisms without compelling reasons.
FULL TEXT OF THE JUDGMENT/ORDER OF MADHYA PRADESH HIGH COURT
Petitioner has filed the present petition challenging the order dated 3/5/2024 (Annexure P/17) passed by the Additional Commissioner, CGST and Central Excise, Bhopal.
2. Petitioner is a Private Limited Company incorporated under the provisions of the Companies Act. The petitioner/Company is also registered under the Goods and Service Tax Act, 2017. Petitioner being a registered dealer engaged in retail/wholesale business of motor cars and motor vehicles and parts thereof and other items.
3. The present dispute relates to payment of GST of the period 1/4/2017 to 31/3/2018. Petitioner submitted annual return for the financial year 2017-2018 (Form GSTR-9) declaring total turnover of Rs.2,65,36,81,693.81. Thereafter, petitioner filed Reconciliation Statement (Form GSTR-9C) disclosing annual turnover of Rs.3,45,78,00,312/-. Accordingly, un-reconciled turnover was disclosed Rs.-80,41,18,618.19/-hence matter came into the scrutiny by the respondents . Due to the aforesaid mismatch in turnover between annual return and financial statement, Superintendent, Range-I, Gwalior called upon the petitioner to submit an explanation for the aforesaid inconsistency. The petitioner sent a reply by way of e-mail that Tax (GST/Excise) of Rs.79,70,48,045/- was included in the turnover. The aforesaid reply was not found satisfactory, therefore, notice under section 74 of the CGST Act, 2017 was issued by the Additional Commissioner to show cause as to why tax amounting to Rs.40,20,59,295/-+ interest + penalty be not imposed upon the petitioner/Company. Thereafter, the petitioner submitted reply but did not demand for personal hearing . Finally vide order dated 3/5/2024 (Annexure P/17) Respondent no. 3 has affirmed the demand and recovery of GST of Rs.40,24,49,457/-(CGST and SGST each of Rs.11,25,76,603/- & Cess 17,69,06,089/-) under S.74(1) of the CGST Act, 2017 r/w the provisions of MPGST Act, 2017 and Compensation Cess Act, 2017. Besides, demand and recovery of applicable interest on the aforesaid demand was also confirmed under S.50 of the CGST Act, 2017 r/w the corresponding provisions of MPGST Act, 2017. Further a penalty of Rs.40,24,49,457/- has also been imposed upon the noticee under S.74(1) read with S.122(2) of the CGST Act, 2017. Hence, this petition has been filed before this Court.
4. Shri Pavan Dwivedi, learned counsel appearing for the petitioner/Company submits that mistakenly the amount of CGST has been included in the annual turnover of the petitioner which is contrary to the definition of “turnover” given in CGST Act, 2017. Petitioner has not been given proper opportunity of personal hearing by the Additional Commissioner. The petitioner personally appeared on 16/1/2024 and made oral submissions. Thereafter, petitioner submitted a detailed explanation in writing along with annexures. However, petitioner did not opt for personal hearing because of satisfaction shown by the Authorities to his oral submissions. Learned counsel further submits that if the Authority was not in agreement with the submissions and an adverse decision was contemplated, then opportunity of hearing ought to have been given to the petitioner as per section 75(4) of the CGST Act, 2017. It is further submits that although the impugned order is appealable, but for filling the appeal the petitioner will have to pay 10% of the total demand, which will cause heavy financial burden on the petitioner. At the most matter would be remitted back to the Additional Commissioner for giving opportunity of hearing to the petitioner to explain the simple anomaly in the turn over. Shri Dwivedi, learned counsel submits that respondent no. 3 did not examine the documents filed by the petitioner as learned Additional Commissioner find it difficult as observed by him in the impugned order.
5. Vide order dated 19/7/2024, respondents were directed to submit a short reply as to what was the difficulty in verifying the contention and documents filed by the petitioner. Respondents have filed the reply raising preliminary objection about maintainability of the writ petition in view of remedy of appeal available under section 107 of the CGST Act, 2017 to Commissioner (Appeals), CGST and Central Excise, Bhopal. It is further submitted by the respondents that petitioner has shown value of Rs.345,78,00,190/- in Table 5(P) of GSTR-9C, while the value shown in Table 5(Q) of GSTR 9-C was R.265,36,81,660/- leading to un-reconciled turnover of Rs.80,41,18,590/-.
6. Shri Surange, learned counsel appearing for the respondents submits that the learned Authority in the impugned order has discussed the explanation given by the petitioner in paragraphs 10 to 17 and rejected the same by recording cogent reasons. The Additional Commissioner has specifically observed that the noticee has not provided the substantial documents during adjudication and on examination of the returns, it could be observed that the applicable GST was not deposited by the noticee on unreconciled turnover. All these arguments on merits are liable to be considered by the appellate Authority. The remedy of appeal cannot be avoided because 10% amount of total recovery amount is liable to be deposited. Learned counsel has placed reliance on decision of the Apex Court in the cases of The Assistant Commissioner of State Tax and Others Vs. M/s Commercial Steel Limited (Civil Appeal No. 5121 of 2021), Godrej Sara Lee Ltd. Vs. Excise and Taxation ((2023) 109 GSTR 402) and State of Tripura Vs. Manoranjan Chakraborty and Others ((2001)10 SCC 740), in which the Apex Court has held that existence of alternative remedy is not an absolute bar to the maintainability of a writ petition under Article 226 of the Constitution, but the same can be entertained in exceptional circumstances where there is a breach of fundamental right, violation of principles of natural justice, an excess of jurisdiction or a challenge to the vires of the statute or delegated legislation.
7. Heard learned counsel for the parties.
8 Petitioner is challenging the order passed by Additional Commissioner CGST and Central Excise on merits. All these grounds which are raised in this petition are available to the petitioner to be raised before the appellate Authority. The remedy of statutory appeal cannot be avoided or bypassed merely because the assessee is liable to pay 10% of the total recovery amount. If the Assessing Officer has not considered the documents filed by the petitioner, the same can be considered by the appellate Authority and if the petitioner succeeds in appeal, the amount so deposited will be refunded to him. The appellate Authority is also liable to examine the conduct and working of its subordinate officers as to whether they are working properly or not while exercising quasi judicial powers. In paragraph 14, the Assessing Officer has observed that it is very difficult to verify the contention of the noticee merely on the basis of copy of profit and loss account submitted in two pages, as the noticee had not provided any concurrent documentary evidences i.e. any ledgers, financial details, ledgers related to notes of profit and loss accounts and any other details by which it could be ascertained whether the contentions of the noticee are justifiable. Before this Court also, the petitioner has only filed annual return as Annexure P/4 (Form GSTR-9) and Reconciliation Statement (Form GSTR- 9C, Annexure P/5) in which these figures are mentioned in tabular form, but documents in support of these figures are liable to be examined by the Assessing Authority or Appellate Authority and not by the writ Court.
Hence, the petition is dismissed with liberty to file appeal.
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