Case Law Details
Sursarita Vanijya Private Limited Vs Principal Commissioner of Central Goods & Services Tax (Jharkhand High Court)
Summary: The Jharkhand High Court, in Sursarita Vanijya (P.) Ltd. v. Principal Commissioner of CGST [W.P. (T) No. 1598 of 2024], ruled that a writ petition challenging a GST demand could not be entertained without first availing the statutory appeal remedy under Section 107 of the CGST Act, 2017. The petitioner contested the GST demand issued in Form GST DRC-07, which directed them to pay Rs. 42,58,557 under Section 73, along with interest and penalties, on the ground that ITC was availed in contravention of Section 16(2)(c) of the CGST Act. The dispute arose because the petitioner’s supplier had undergone liquidation under the Insolvency and Bankruptcy Code, 2016 (IBC), and their liabilities, including GST dues, were considered extinguished. However, the tax authorities proceeded with the demand, prompting the petitioner to seek relief through a writ petition. The Court acknowledged that issues related to merits and procedural fairness were raised but emphasized that the petitioner had an alternative remedy available under Section 107 of the CGST Act. Citing the principle of exhaustion of remedies, the Court directed the petitioner to file an appeal within two weeks and instructed the Appellate Authority to decide the matter within four weeks of receiving the appeal. The ruling aligns with prior cases, such as Vipin Kevalchand Shrishrimal v. State of Gujarat, where the Gujarat High Court similarly held that an appeal should be preferred before invoking writ jurisdiction. This decision reinforces the legal principle that writ petitions should not be used as a substitute for statutory appellate mechanisms unless exceptional circumstances exist.
Facts:
M/s Sursarita Vanijya (P.) Ltd. (“the Petitioner”) filed the present petition challenging the order issued by revenue (“the Respondent”) in Form GST DRC-07 dated December 6, 2023 (“the Impugned Order”) whereby the Petitioner was directed to pay Rs. 42,58,557 under Section 73 of the CGST Act along with 18% interest under Section 50 and penalty of Rs. 4,25,856 under Section 122 (2) (a) of the CGST Act and Rs.42,58,557 under Section 122(1) of the CGST Act on the ground that ITC has been availed in contravention of Section 16(2)(c) of the CGST Act, especially since the seller has undergone liquidation under the provisions of the Insolvency and Bankruptcy Code, 2016 (“the IBC”) and which fact was made known to the Respondent. Therefore, contending that as the supplier had undergone liquidation under the IBC, its liabilities, including GST dues has been extinguished through the liquidation process.
Hence, aggrieved by the circumstances, the Petitioner filed the present writ petition.
Issue:
Whether a writ petition is maintainable if the remedy of appeal is not availed?
Held:
The Hon’ble Jharkhand High Court in Writ Petition (T) No. 1598 of 2024 held as under:
- Noted that, as per Section 107 of the CGST Act, the Petitioner had an alternative remedy of appeal before the Appellate Authority.
- Held that, since merit-based and procedural issues were involved, the matter should be adjudicated at the appellate level rather than directly in a writ petition.
- Directed that, the Petitioner should file an appeal within two weeks and the Appellate Authority must decide the matter within four weeks from the date of receipt of copy of order of this Court.
Our Comments:
Section 107 of the CGST Act governs “Appeals to Appellate Authority”. Section 107 (1) of the CGST Act states that any person aggrieved by any decision or order passed under the CGST Act or the State Goods and Services Tax Act, 2017 (“the SGST Act”) or the Union Territory Goods and Services Tax Act, 2017 (“the UTGST Act”) by an adjudicating authority may appeal to such Appellate Authority as may be prescribed within three months from the date on which the said decision or order is communicated to such person.
In pari materia case of Vipin Kevalchand Shrishrimal v. State of Gujarat [R/Special Civil Application No. 123 of 2025 dated January 6, 2025] the Hon’ble Gujarat High Court appropriate statutory alternative remedy available to assessee was to file an appeal under Section 107 of the CGST Act before competent authority. Therefore, instant petition was to be disposed of with liberty to assessee to approach Appellate Authority under Section 107 of the CGST Act.
FULL TEXT OF THE JUDGMENT/ORDER OF JHARKHAND HIGH COURT
The instant writ petition has been filed under Article 226 of the Constitution of India by seeking for the following reliefs:
(i) For issuance of an appropriate writ(s)/order(s)/direction(s) including a writ of Certiorari for quashing/setting aside the order dated 06.12.2023, received on12.12.2023 issued in Form GST DRC-07 (Annexure-12) by the Respondent No.2 wherein the Petitioner has been directed to pay an amount of Rs.42,58,557/- under Section 73, along with interest at the rate of 18% per annum under Section 50, and penalty of Rs.4,25,856/- under Section 122 (2) (a) and Rs.42,58,557/-under Section 122 (1) on the alleged ground that Input Tax Credit has been availed in contravention of Section 16 (2) (c) of the Central Goods and Services Act, 2017 (‘the Act’), especially since the seller has undergone liquidation under the provisions of the Insolvency and bankruptcy Code, 2016 (‘IBC’), and which fact was made known to the Respondent Authorities.
(ii) For issuance of an appropriate writ(s)/ order(s)/ direction(s) including a writ of Declaration for declaring that once the supplier/seller has undergone liquidation under the provisions of the Insolvency and bankruptcy Code, 2016, their liability under the Act, which were in the nature of Operational Debt have been subsumed in the liquidation process, and have been settled and /or extinguished, which cannot be recovered by the Respondents from the Petitioner in the garb of Section 16 (2) (c) of the Act.
(iii) For issuance of any other appropriate writ(s) order(s) direction(s) as Your Lordships may deem fit and proper in the facts and circumstances of the case.
2. The various issues have been pointed out regarding the merit as also violation of principle of natural justice.
3. Mr. P.S.A. Swaroop Pati, learned counsel appearing for the respondent CGST has raised the preliminary objection regarding the maintainability of the present petition on the ground of remedy of appeal under Section 107 of the CGST Act, 2017.
4. Upon this, Mr. M.S. Mittal, learned senior counsel appearing for the petitioner is having no objection.
5. Considering the same, this petition is being disposed of with liberty to file appeal within two weeks from the date of receipt of copy of this order, by raising all the issues along with the supported judgments. If such appeal will be filed, the same will be decided by the concern appellate authority within a period of four weeks from the date of receipt of copy of order of this Court, in accordance with law.
6. Accordingly, this writ petition i.e. W.P.(T) No. 1598 of 2024 stands disposed of.
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