Case Law Details
Ghanshyambhai Kalubhai Malani Vs Union of India (Gujarat High Court)
The Gujarat High Court has declined to entertain a petition filed by Ghanshyambhai Kalubhai Malani, who challenged an order issued under Section 74 of the CGST/SGST Act, 2017. The court, led by learned advocates Mr. Vikramjeet Singh for the petitioner, Ms. Shrunjal Shah for the state respondents, and Ms. Prutha Bhavsar for the Union respondents, directed the petitioner to instead avail the statutory alternative remedy of appeal.
The petitioner had sought a writ of mandamus, asking the High Court to declare that payments made towards mineral royalties were in accordance with State Government instructions. He also sought to strike down the definitions and explanations of “Royalty” provided by the Indian Bureau of Mines and quash the order dated January 17, 2025, issued by the Sales Tax Officer. A key contention raised by the petitioner’s advocate was that the authorities improperly invoked Section 74 of the GST Act, arguing that there was no fraudulent intent in the petitioner’s failure to deposit tax on royalty payments, which he considered a service.
The High Court, however, focused on the principle of exhausting alternative remedies. It cited the Supreme Court’s judgment in The Assistant Commissioner of State Tax & others Vs. M/s. Commercial Steel Ltd. (2021 (9) TMI 480 SC). In that case, the Supreme Court had clarified the exceptional circumstances under which a writ petition under Articles 226/227 of the Constitution of India could be entertained despite the existence of an alternative statutory remedy. These exceptions include:
- A breach of fundamental rights.
- A violation of the principles of natural justice.
- An excess of jurisdiction.
- A challenge to the vires(legal validity) of a statute or delegated legislation.
The Supreme Court in Commercial Steel Ltd. had emphasized that unless one of these exceptional circumstances is established, it is not appropriate for a High Court to entertain a writ petition when an adequate statutory appellate mechanism is available.
Applying this legal precedent, the Gujarat High Court observed that none of the stated exceptions were present in Ghanshyambhai Kalubhai Malani’s petition. Consequently, the court decided not to entertain the petition at this stage.
Instead, the court relegated the petitioner to file an appeal before the Appellate Authority under Section 107 of the GST Act. The High Court further directed the Appellate Authority to consider the time spent by the petitioner pursuing the writ petition before the High Court as “bonafide” when evaluating any potential delay in filing the appeal, provided the appeal is filed within four weeks from the date of the High Court’s order.
With these observations, the petition was disposed of, reinforcing the judicial preference for utilizing statutory appellate mechanisms before approaching constitutional courts.
FULL TEXT OF THE JUDGMENT/ORDER OF GUJARAT HIGH COURT
1. Heard learned advocate Mr.Vikramjeet Singh for learned advocate Mr.Vanrajsinh M. Damore for the Petitioner; learned Assistant Government Pleader Ms.Shrunjal Shah for the Respondent Nos. 2 and 5 and learned advocate Ms.Prutha Bhavsar for learned advocate Mr. Ankit Shah for the Respondent Nos. 1,3 and 4.
2. This petition is filed under Article 227 of the Constitution of India with the following prayers :
“A. That Your Lordships may be pleased to issue a Writ of Mandamus, or any appropriate writ, order holding and declaring that payment towards obtaining Mineral Royalties made by the Petitioner is as per instructions, terms and condition laid by The Geology and Mining Department, State Government of Gujarat;
B. That Your Lordships may be pleased to issue a Writ of Mandamus, or any appropriate writ, order or direction striking down the definitions and explanation of Royalty, written in Government Relations of MINERAL ROYALTIES by Indian Bureau of Mines, Ministry of Mines, Government of India;
C. That your Lordships may be pleased to issue a writ of Mandamus or a writ in the nature of Mandamus or any other writ, order or direction quashing and setting aside the Order, dated 17th January 2025, issued by the Respondent No.5 herein (annexed at “Annexure G”), as being arbitrary and illegal;
D. That pending notice, admission and final hearing of the present Petition, Your Lordships may be pleased to stay further proceedings pursuant to the Order, dated 17th January 2025, issued by the Respondent No.5 (annexed at ANNEXURE ‘G’);
E. That ex-parte ad interim relief in terms of prayer ‘D’ may kindly be granted;
F. Such further relief(s) as deemed fit in the facts and circumstances of the present case may kindly be granted in the interest of justice for which act of kindness your Petitioner shall forever pray.”
3. The Petitioner has challenged the Order dated 16.01.2025 in Form GST-DRC-07 passed under Section 74 of the CGST/SGST Act, 2017.
4. The main contention raised by the learned advocate for the Petitioner is that the Respondent-authority could not have invoked the provision of Section 74 of the GST Act, as there was no fraudulent intention on the part of the Petitioner in not depositing the tax on the royalty paid by the Petitioner, falling within the scope of service.
5. Considering the above submissions raised on behalf of the Petitioner, we are of the opinion that the petition cannot be entertained as the Petitioner is challenging the Order-in-Original directly before this Court instead of availing the alternative remedy of appeal under Section 107 of the GST Act. The Hon’ble Apex Court in case of The Assistant Commissioner of State Tax & others Vs. M/s. Commercial Steel Ltd. reported in 2021 (9) TMI 480 SC, in similar circumstances as to when the writ petition can be entertained under Articles 226/227 of the Constitution of India has observed as under:-
“11. The respondent had a statutory remedy under section 107. Instead of availing of the remedy, the respondent instituted a petition under Article 226. The existence of an alternate remedy is not an absolute bar to the maintainability of a writ petition under Article 226 of the Constitution. But a writ petition can be entertained in exceptional circumstances where there is:
(i) a breach of fundamental rights;
(ii) a violation of the principles of natural justice;
(iii) an excess of jurisdiction; or
(iv) a challenge to the vires of the statute or delegated legislation.
12. In the present case, none of the above exceptions was established. There was, in fact, no violation of the principles of natural justice since a notice was served on the person in charge of the conveyance. In this backdrop, it was not appropriate for the High Court to entertain a writ petition. The assessment of facts would have to be carried out by the appellate authority. As a matter of fact, the High Court has while doing this exercise proceeded on the basis of surmises. However, since we are inclined to relegate the respondent to the pursuit of the alternate statutory remedy under Section 107, this Court makes no observation on the merits of the case of the respondent.
13. For the above reasons, we allow the appeal and set aside the impugned order of the High Court. The writ petition filed by the respondent shall stand dismissed. However, this shall not preclude the respondent from taking recourse to appropriate remedies which are available in terms of Section 107 of the CGST Act to pursue the grievance in regard to the action which has been adopted by the state in the present case.”
6. In view of the above dictum of law, this petition is not entertained at this stage and the Petitioner is relegated to file an appeal before the Appellate Authority under Section 107 of the GST Act raising all the contentions which are raised in this petition. The Appellate Authority shall consider the time spent by the Petitioner before this Court as bonafide for consideration of issue of delay, if any, if the appeal is filed within a period of four weeks from today.
7. With the aforesaid observations, this petition stands disposed of.
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