Case Law Details
Jugsalai Nagar Parishad Vs Union of India (Jharkhand High Court)
The Jharkhand High Court dealt with multiple writ petitions challenging orders passed by adjudicating authorities under the CGST Act, 2017. The primary issue before the Court was whether such writ petitions were maintainable when an alternative statutory remedy of appeal under Section 107 of the CGST Act was available to the petitioners.
The petitioners, comprising Municipal Corporations and Nagar Parishads, contested the GST demands imposed on them. They argued that such demands were inherently illegal and without jurisdiction. To support this contention, they relied on judicial precedents, including decisions of the Supreme Court, asserting that where an order is wholly without jurisdiction, the existence of an alternative remedy does not bar the maintainability of a writ petition.
The petitioners further contended that local self-government bodies are immune from GST, relying on constitutional provisions such as Articles 243W and 243X, along with Entry V of List II of the Seventh Schedule. They also cited a Madras High Court decision to argue that GST cannot be imposed on Municipal Corporations or similar local authorities under any circumstances.
On the other hand, the respondents opposed these claims, arguing that the petitioners’ position was misconceived. They submitted that the adjudicating authority had already examined the factual aspects of the transactions and concluded that only core governmental functions might qualify for exemption. The GST demand, in these cases, related to routine transactions involving the sale of goods or services, which were not constitutionally or statutorily exempt.
The Court examined the rival submissions and focused primarily on the availability of an alternative remedy. It noted that the impugned orders themselves informed the petitioners of their right to appeal and provided details of the appellate authority. Despite this, the petitioners approached the High Court without substantiating why the alternative remedy was inadequate.
The Court reiterated the settled legal principle that writ jurisdiction under Article 226 should not be exercised when an effective and efficacious statutory remedy is available, except in exceptional circumstances. It referred to precedents, including a decision of the Bombay High Court, which emphasized that bypassing statutory remedies is permissible only in rare and exceptional cases.
Addressing the petitioners’ argument regarding lack of jurisdiction, the Court held that the test of “wholly without jurisdiction,” as laid down in earlier Supreme Court decisions, was not satisfied in the present cases. It observed that determining whether GST was applicable required examination of factual aspects of the transactions. Such fact-intensive inquiries are not suitable for adjudication under the Court’s extraordinary and summary jurisdiction.
The Court also expressed a prima facie view that Municipal Corporations and local self-government authorities are not entirely immune from GST for all their activities. It indicated that while certain core functions might be exempt, other activities, particularly commercial or transactional ones, may legitimately attract GST.
Importantly, the Court refrained from making any conclusive findings on the merits of the case, noting that doing so could prejudice the petitioners if they chose to pursue the statutory appellate remedy. It emphasized that all issues, including constitutional and legal challenges, could be appropriately raised before the appellate authority.
The Court further clarified that the present cases did not involve a challenge to the constitutional validity of any statutory provision, nor were they cases of ultra vires legislation. Therefore, they did not warrant direct interference under Article 226.
In conclusion, the Court declined to entertain the writ petitions and directed the petitioners to avail the alternative remedy of appeal under the CGST Act. However, considering that the petitioners had been bona fide pursuing the writ petitions, the Court granted them liberty to file appeals within four weeks. It also directed the appellate authority to decide such appeals on merits without raising objections regarding limitation.
FULL TEXT OF THE JUDGMENT/ORDER OF JHARKHAND HIGH COURT
1. Heard learned counsel for the parties.
2. In all these writ petitions, the challenge is to the orders passed by the adjudicating authorities, against which, the petitioners have alternative and efficacious remedy of preferring appeals under Section 107 of the CGST Act, 2017.
3. The impugned orders, in turn, inform the petitioners that they have right to appeal and even give the details of the appellate authority. Despite all these, the petitioners, based on a bald statement in these writ petitions that they have got no other alternative and/or equally efficacious, speedy and economical remedy, have instituted these writ petitions.
4. Learned counsel for the petitioners argues that the demand of GST upon the petitioners, which are Municipal Corporations or Nagar Parishads, is patently illegal and therefore without jurisdiction. Learned counsel relies on the judgments rendered by the Hon’ble Supreme Court in the cases of Godrej Sara Lee Ltd. v. Excise and Taxation Officer-cum-Assessing Authority and Others reported in 2023 5CC OnLine SC 95 and Whirlpool Corporation v. Registrar of Trade Marks, Mumbai and Others reported in (1998) 8 5CC 1 to submit that where an order is wholly without jurisdiction, the plea of alternative remedy cannot be a bar to the entertainability of the writ petition.
5. Learned counsel for the petitioners also relies upon a decision rendered by the learned Single Judge of Madras High Court in the case of Cuddalore Municipality v. Joint Commissioner of GST and Central Excise, Tiruchirappalli reported in (2021) 93 GSTR 287 to submit that this decision supports a blanket proposition that under no circumstances, GST can be demanded from Municipal Corporations or local self-government authorities like the Municipal Corporation, Nagar Panchayat etc.
6. Learned counsel for the petitioners also relies upon the provisions under Article 243W & 243X together with Entry-V in List-2 of Schedule-VII of the Constitution to make good his submission that local self-government authorities like Municipal Corporation etc. are immune from taxation under the CGST Act, 2017.
7. Mr. P.A.S. Pati, learned counsel for the respondents, at the outset, submits that the blanket proposition advanced on behalf of the petitioners is quite misconceived. He submits that this contention was duly considered by the adjudicating authority, who while referring to several factual aspects, concluded that only core activities of a Corporation or a local self-government body might be able to claim some exemption. He submits that in these cases, GST was imposed on routine sale of goods or services transactions and there was no Constitutional or statutory bar to such imposition.
8. In any event, learned counsel for the respondents submits that these are the matters, which the petitioners may appropriately raise before the appellant authority and no case is made out for entertaining these writ petitions.
9. We have considered the rival contentions, and we are satisfied that these are not fit cases to be entertained by exercising our extraordinary jurisdiction under Article 226 of the Constitution when the Petitioners have an alternate and efficacious remedy available to them.
10. At least prima facie, based on the arguments presented earlier and the decision issued by the learned Single Judge of the Madras High Court, we do not believe that Municipal Corporations or other local self-government authorities are exempt or immune from taxation under the CGST Act, 2017, regarding all the transactions or activities they carry out.
11. Therefore, it is difficult to accept that the impugned orders now passed by the adjudicating authorities are “wholly without jurisdiction” which is really the test propounded in Whirlpool Corporation (supra) and Godrej Sara Lee Ltd. (supra).
12. In these cases, even for deciding the jurisdictional issue, reference will essentially have to be made to the factual aspects of the transactions, upon which taxes are sought to be levied. The adjudicating authority has undertaken this exercise and only thereafter has confirmed the demand.
13. At this stage, it would not be appropriate for us to hold that the determination of the adjudicating authority is either right or wrong because such a holding might prejudice the petitioners, in case, they decide to avail the alternative remedy of preferring appeals. However, we must say that the above issues, which shall involve a factual determination regards the transactions, which are sought to be taxed, cannot or at least need not be adjudicated by us exercising our extraordinary and summary jurisdiction because the legislature has provided the petitioners with an alternative/efficacious/ statutory remedy of preferring appeals where such questions can be suitably addressed.
14. In the case of Oberoi Constructions Limited vs. The Union of India & Others reported in (2025) 137 GSTR 601, the Division Bench of the Bombay High Court has considered the circumstances in which a statutory and alternative remedy may be bye-passed and a writ petition may directly be entertained. In the said decision, the Bombay High Court has referred to and relied upon several decisions of the Hon’ble Supreme Court explaining the circumstances in which the alternative remedy may be bye-passed.
15. The decision rendered in the case of Oberoi Constructions Limited (supra) and several precedents referred to therein, holds that only under exceptional circumstances, the extraordinary jurisdiction under Article 226 of the Constitution may be exercised when the legislature has provided the petitioner with alternative and efficacious remedy of preferring an appeal.
16. In these cases, as noted earlier, the test prescribed in Whirlpool Corporation (supra) and Godrej Sara Lee Ltd. (supra) cannot be said to have been fulfilled. The adjudication of the issues now raised in these writ petitions would involve a serious factual element, which may not be appropriately undertaken in exercise of extraordinary and summary jurisdiction under Article 226 of the Constitution. No exceptional case has been made out.
17. If the levy of GST is indeed contrary to law or contrary to the Constitutional provisions as the petitioners seek to interpret them, such issues can always be raised before the appellate authority just as they were raised before the adjudicating authority at the first instance. These are not the cases where the provisions of any statute have been questioned on the ground of unconstitutionality or the principle of ultra vires.
18. For all the above reasons, we decline to entertain these writ petitions, but leave it open to the petitioners to avail the alternative/efficacious/statutory remedy of preferring appeals as may be available to them under the CGST Act, 2017.
19. However, we take cognizance of the fact that the petitioners have been Bonafide pursuing these writ petitions before this Court. Therefore, if they institute appeals within four weeks from the date of uploading of this order after complying with all the prescribed statutory formalities, the appellate authority is directed to hear such appeals on their own merits and in accordance with law without adverting to the issue of limitation.
20. All contentions of the parties are explicitly left open. Even the observations made in this order are for the limited purpose of determining whether the petitioners should be relegated to the alternate statutory remedies. Therefore, even such observations need not influence the appellate authority in deciding the appeals, if instituted in terms of the liberty now granted.
21. The present writ petitions are accordingly disposed of with the liberty in the above terms.
22. No costs.
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