Case Law Details
Grainotch Industries Ltd Vs Union Of India Through Its Secretary And Others (Bombay High Court)
Bombay High Court granted an interim stay on a GST demand of ₹71.23 crore imposed on Grainotch Industries Ltd. The petitioner challenged the consolidated notice for the period 2017-2021, arguing that it resulted in double taxation and that Extra Neutral Alcohol (ENA) is not taxable under the GST Act. The petitioner cited a Supreme Court judgment and amendments to Section 9 of the GST Act to support their claims. While the respondents argued for an alternate remedy under Section 107 of the GST Act, the court observed that the petitioner’s challenge raised significant jurisdictional and substantive questions that warranted consideration under Article 226 of the Constitution. The court found prima facie merit in the petitioner’s arguments and deemed the consolidated notice and tax demand unjustifiable. The respondents were granted time to counter the petitioner’s claims and explore contrary case laws. Meanwhile, the court issued an interim stay on the impugned order and directed respondents to decide if an affidavit-in-reply was necessary. The matter is now tagged with Writ Petition 13627 of 2024 and is scheduled for further hearing in February 2025.
FULL TEXT OF THE JUDGMENT/ORDER OF BOMBAY HIGH COURT
1. Heard the learned counsel for the parties on the alternate remedy against the impugned order.
2. The petitioner was served with consolidated notice by respondent No.3 for paying GST from the year 2017 – 2021.After show-cause, the petitioner had explained the said However, his explanation was not accepted and the impugned order is passed, holding the respondents liable to pay Rs.71,23,02,689/- with fine of equal amount.
3. The learned counsel for respondent 3 had raised objection that since efficacious alternate remedy is available under Section 107 of the Central Goods and Service Tax Act, 2017 (for short, “GST Act”), this Court may not exercise the writ jurisdiction under Article 227 of the Constitution of India
4. The learned counsel for the petitioner has submitted that issuing consolidated notice is impermissible and it goes to hook of the Taxing double for the same thing, is prima facie unjustifiable and since the product for which the GST sought is industry base, it is not taxable. He has taken us through the various pronouncements of the Court and amendment to Section 9 of the GST Act. In nut shell, he submits that the issue whether Extra Neutral Alcohol (ENA) is liable for GST has been set at rest in the case of State of U.P. and others vs. M/s. Lalita Prasad Vanish and sons, 2024 INSC 812. In this case, the dispute raised by the petitioner has been elaborately discussed.
5. To bolster his arguments, the learned counsel for the petitioner has placed reliance on another case law of the Allahabad High After hearing him and going through the law laid down by the Hon’ble Supreme Court and amendment to Section 9 of the GST Act, we are prima facie satisfied that the issue raised by the petitioner could be entertained under Article 226 of the Constitution of India. However, the learned counsel for respondent No.3 seeks time to make a search contrary to the case laws relied upon by the learned counsel for the petitioner as well as the arguments advanced by him. He submits that the issue of jurisdiction for alternate remedy may be kept open.
6. To follow the natural justice we must give an opportunity to the learned counsel for the respondent No.3 to comment on the arguments advanced by the learned counsel for the petitioner on the issue of jurisdiction under Article 226 of the Constitution of India.
7. Since we are prima facie satisfied with the arguments advanced by the learned counsel for the petitioner, there shall be interim stay to the impugned order till the next date.
8. Issue notice to the respondents, returnable on 02.2025.
9. Taghar, learned standing counsel waives service of notice for respondents No.1 and 2.Mr. Parishad Diwakar, learned counsel waives service of notice for respondent No.3. The learned A.G.P. waives service of notice for respondents No.4 to 6.
10. Respondent/State should take a decision, whether its affidavit-in-reply is necessary or not.
11. Tag this petition with Writ Petition 13627 of 2024.
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