HC Shouldn’t Use Writ Powers in GST Cases with Appeal Remedy: SC

Assistant Commissioner of State Tax and Others Vs Commercial Steel Limited (Supreme Court of India)

In a significant ruling clarifying the exercise of writ jurisdiction in tax matters, the Supreme Court of India has set aside a judgment of the Telangana High Court that had interfered with the detention of goods and collection of tax and penalty under the Goods and Services Tax (GST) law. The apex court emphasized that taxpayers must first exhaust the statutory alternative remedies available to them before approaching the High Court under Article 226 of the Constitution.

The case involved an appeal filed by the Assistant Commissioner of State Tax and other tax authorities against a decision of a Division Bench of the Telangana High Court dated March 4, 2020. The High Court, acting on a writ petition filed by Commercial Steel Limited, had quashed the action of the tax authorities in collecting an amount of ₹4,16,447 towards tax and penalty under the Central Goods and Services Tax Act, 2017 (CGST) and State Goods and Services Tax Act (SGST). The High Court had directed a refund of the collected amount with 6% interest and had even suggested initiating disciplinary proceedings against the Assistant Commissioner, besides imposing costs.