Case Law Details
Bhagavathi Granites Vs Superintendent of Central Tax (Telangana High Court)
Telangana High Court has dismissed a writ petition filed by Bhagavathi Granites against the Superintendent of Central Tax, challenging a bank attachment order. The petitioner argued that the attachment was invalid because the Goods and Services Tax (GST) order-in-original, dated January 6, 2022, was defective due to the alleged non-furnishing of the DRC-07 form prior to its issuance. However, the court found this argument insufficient to warrant interference, particularly since the order-in-original itself had not been appealed.
The core of the petitioner’s argument rested on the claim that the DRC-07 form, which details the demand for tax, interest, and penalty, was only issued on September 24, 2024, long after the order-in-original. This, they contended, rendered the foundational order, and by extension the bank attachment, inherently flawed and subject to intervention without a direct challenge to the order-in-original. However, the respondents, represented by Ms. Pravalika, counsel for CBIC, countered this by producing evidence that the DRC-07 was in fact uploaded to the GST portal on June 27, 2023.
The High Court articulated three reasons for rejecting the petitioner’s stance. Firstly, the factual dispute regarding the DRC-07’s upload date, with the respondents providing evidence of an earlier upload. Secondly, and critically, the court reiterated a well-established legal principle: even an order considered “bad in law” or “voidable” must be challenged in appropriate legal proceedings. A litigant cannot unilaterally declare an order invalid and disregard its consequences. The court emphasized that the bank attachment directly stemmed from the order-in-original, making a challenge to the latter a prerequisite for questioning the former.
To fortify its position, the Telangana High Court cited several judicial precedents from the Supreme Court. In Robust Hotels (P) Ltd. v. EIH Ltd. (2017), the Supreme Court held that neither a party to the dispute nor a third party can unilaterally determine an order’s validity; it must be set aside by a competent court. Similarly, in Krishnadevi Malchand Kamathia v. Bombay Environmental Action Group (2011), the Supreme Court affirmed that “even if an order is void, it requires to be so declared by a competent forum and it is not permissible for any person to ignore the same merely because in his opinion the order is void.” This judgment further cited State of Kerala v. M.K. Kunhikannan Nambiar Manjeri Manikoth (1996), which observed that “even a void order or decision rendered between parties cannot be said to be non-existent in all cases and in all situations. Ordinarily, such an order will, in fact, be effective inter partes until it is successfully avoided or challenged in a higher forum. Mere use of the word ‘void’ is not determinative of its legal impact.” The principle was further supported by Shiv Chander Kapoor v. Amar Bose (1990), which highlighted that an “invalid” order “subsists and remains fully effective unless and until it is set aside by a court of competent jurisdiction.”
Finally, the High Court also considered the significant delay in filing the writ petition. The order-in-original was issued on January 6, 2022, but the writ petition was filed on September 18, 2024, long after the stipulated appeal period had expired. The court referenced the Supreme Court’s ruling in Assistant Commissioner (CT) LTU, Kakinada v. Glaxo Smith Kline Consumer Health Care Ltd (2020), which cautioned against High Courts entertaining writ petitions as a matter of course after the expiry of statutory limitation periods for appeal. The Supreme Court in that case underscored that while High Courts retain jurisdiction under Articles 226 and 227, allowing writ petitions after the prescribed appeal period would contravene the underlying principle of statutory redressal mechanisms. For these cumulative reasons, including the factual dispute over DRC-07 and the legal necessity of challenging even a purportedly void order, coupled with the delay, the Telangana High Court declined to intervene and dismissed the writ petition.
FULL TEXT OF THE JUDGMENT/ORDER OF TELANGANA HIGH COURT
Sri M.Naga Deepak, learned counsel for the petitioner and Ms. Pravalika, learned counsel representing Sri Dominic Fernandes, learned Senior Standing Counsel for CBIC, appearing for respondent Nos.1 to 3.
2. The petitioner suffered an Order-in-Original on 06.01.2022. This writ petition is filed on 18.09.2024.
3. The petitioner, admittedly, did not prefer any appeal against the Order-in-Original dated 06.01.2022. The singular argument advanced by learned counsel for the petitioner is that providing the DRC-07 before passing the Order-in-Original was mandatory and the same was issued only on 24.09.2024. Thus, even if Order-in-Original is not called in question, the bank attachment founded upon a defective Order-in-Original without furnishing DRC-07 is liable to be interfered with.
4. Pravalika, learned counsel representing Sri Dominic Fernandes, learned Senior Standing Counsel for CBIC, opposed the prayer on the basis of memo filed by respondent Nos.1 to 3 and urged that the DRC-07 was actually uploaded on 27.06.2023. A photo copy of relevant portal relating to GST DRC-07 is filed for ready reference.
5. The grievance relating to the bank attachment has direct nexus with the Order-in-Original. In other words, it is the Order-in-Original which became the reason for the bank attachment. Despite repeated query, learned counsel for the petitioner has not shown any interest to assail the Order-in-Original. The contention of the learned counsel for the petitioner is that since DRC-07 has not been issued before passing the Order-in-Original, there is no need to challenge the Order-in-Original. For three reasons, we are not able to persuade ourselves with this line of argument. Firstly, as per the stand taken by respondent Nos.1 to 3, DRC-07 was indeed brought on portal on 27.06.2023 and secondly, if an order (Order-in-Original) is bad in law, the litigant cannot assume that it is bad in law. Even a void order needs to be challenged in appropriate proceedings. The Supreme Court has laid down the curtains on this aspect in Robust Hotels (P) Ltd. v. EIH Ltd.1, Krishnadevi Malchand Kamathia v. Bombay Environmental Action Group2, State of Kerala v. M.K.Kunhikannan Nambiar Manjeri Manikoth3 and Shiv Chander Kapoor v. Amar Bose4.
6. In Robust Hotels (P) Ltd. (supra), it was held as under:
“42. This Court further held that it is not open either to a party to the lis or to any third party to determine at their own that an order passed by a court is valid or void. A party to the lis or the third party who considers an order passed by a court as voidable or non est, must approach the court of competent jurisdiction to have the said order set aside on such grounds, as may be available in law…”
(Emphasis Supplied)
7. In Krishnadevi Malchand Kamathia (supra), it was held as under:
“16. It is a settled legal proposition that even if an order is void, it requires to be so declared by a competent forum and it is not permissible for any person to ignore the same merely because in his opinion the order is void. In State of Kerala v. M.K. Kunhikannan Nambiar ManjeriManikothNaduvil [(1996) 1 SCC 435], Tayabbhai M. Bagasarwalla v. Hind Rubber Industries (P) Ltd. [(1997) 3 SCC 443], M. Meenakshi v. Metadin Agarwal [(2006) 7 SCC 470] and Sneh Gupta v. Devi Sarup [(2009) 6 SCC 194], this Court held that whether an order is valid or void, cannot be determined by the parties. For setting aside such an order, even if void, the party has to approach the appropriate forum.
17. In State of Punjab v. Gurdev Singh [(1991) 4 SCC 1] this Court held that a party aggrieved by the invalidity of an order has to approach the court for relief of declaration that the order against him is inoperative and therefore, not binding upon him.While deciding the said case, this Court placed reliance upon the judgment in Smith v. East Elloe RDC [1956 AC 736 : (1956) 2 WLR 888 : (1956) 1 All ER 855] , wherein Lord Radcliffe observed : (AC pp. 769-70)
“An order, even if not made in good faith, is still an act capable of legal consequences. It bears no brand of invalidity [on] its forehead. Unless the necessary proceedings are taken at law to establish the cause of invalidity and to get it quashed or otherwise upset, it will remain as effective for its ostensible purpose as the most impeccable of orders.”
18. In Sultan Sadik Sanjay Raj Subba [(2004) 2 SCC 377], this Court took a similar view observing that once an order is declared non est by the court only then the judgment of nullity would operate erga omnes i.e. for and against everyone concerned.Such a declaration is permissible if the court comes to the conclusion that the author of the order lacks inherent jurisdiction/competence and therefore, it comes to the conclusion that the order suffers from patent and latent invalidity.
19. Thus, from the above it emerges that even if the order/notification is void/voidable, the party aggrieved by the same cannot decide that the said order/notification is not binding upon it. It has to approach the court for seeking such declaration.The order may be hypothetically a nullity and even if its invalidity is challenged before the court in a given circumstance, the court may refuse to quash the same on various grounds including the standing of the petitioner or on the ground of delay or on the doctrine of waiver or any other legal reason. The order may be void for one purpose or for one person, it may not be so for another purpose or another person.
8. In M.K.Kunhikannan Nambiar Manjeri Manikoth (supra), it was held as under:
7. It is not necessary for us to go into the merits of the case. We are of the view that the order passed inter partes in CRP No. 3440 of 1977 dated 2-11-1977, has become final, and it concludes the matter. The observations made in the proceedings, at the instance of the first respondent regarding the validity of the order of the Board, in CRP No. 3696 of 1977, will not, in any way, affect the legality and validity of the proceedings declining to implead Respondents 3 and 4 or the order passed in revision therefrom — CRP No. 3440 of 1977. It is true that the proceedings dated 28-6-1977 were observed to be void in law in CRP No. 3696 of 1977, filed by the first respondent. In our opinion, even a void order or decision rendered between parties cannot be said to be non-existent in all cases and in all situations. Ordinarily, such an order will, in fact, be effective inter partes until it is successfully avoided or challenged in a higher forum. Mere use of the word ‘void’ is not determinative of its legal impact. The word ‘void’ has a relative rather than an absolute meaning. It only conveys the idea that the order is invalid or illegal. It can be avoided. There are degrees of invalidity depending upon the gravity of the infirmity, as to whether it is, fundamental or otherwise and in this case, the only complaint about the initiation of the suo motu proceedings by the Board was, that it was not initiated on intimation by the State Land Board about the non-filing of the statement as required by Section 85(7) of the Kerala Land Reforms Act. In our opinion, this is not a case where the infirmity is fundamental. It is unnecessary to consider the matter further.
8. In Halsbury’s Laws of England, 4th Edn., (Re-issue) Vol. 1(1) in para 26, p. 31, it is stated, thus:
“If an act or decision, or an order or other instrument is invalid, it should, in principle, be null and void for all purposes; and it has been said that there are no degrees of nullity. Even though such an act is wrong and lacking in jurisdiction, however, it subsists and remains fully effective unless and until it is set aside by a court of competent jurisdiction. Until its validity is challenged, its legality is preserved.”
In the Judicial Review of Administrative Action, De Smith, Woolf and Jowell, 1995 Edn., at pp. 259-60 the law is stated thus:
“The erosion of the distinction between jurisdictional errors and non-jurisdictional errors has, as we have seen, correspondingly eroded the distinction between void and voidable decisions. The courts have become increasingly impatient with the distinction, to the extent that the situation today can be summarised as follows:
(1) All official decisions are presumed to be valid until set aside or otherwise held to be invalid by a court of competent jurisdiction.”
Similarly, Wade and Forsyth in Administrative Law, Seventh Edn., 1994, have stated the law thus at pp. 341-342:
“… every unlawful administrative act, however invalid, is merely voidable. But this is no more than the truism that in most situations the only way to resist unlawful action is by recourse to the law. In a well-known passage Lord Radcliffe said:
‘An order, even if not made in good faith, is still an act capable of legal consequences. It bears no brand of invalidity upon its forehead. Unless the necessary proceedings are taken at law to establish the cause of invalidity and to get it quashed or otherwise upset, it will remain as effective for its ostensible purpose as the most impeccable of orders.’
This must be equally true even where the brand of invalidity is plainly visible: for there also the order can effectively be resisted in law only by obtaining the decision of the court. The necessity of recourse to the court has been pointed out repeatedly in the House of Lords and Privy Council without distinction between patent and latent defects.”
The above statement of the law supports our view that the order of the Board dated 28-6-1977, declining to implead Respondents 3 and 4 (which stood confirmed in revision) concludes the matter against Respondents 3 and 4.”
(Emphasis Supplied)
9. In Shiv Chander Kapoor (supra), the Supreme Court held as under:
“23. In Wade’s Administrative Law, 6th edn. at pp. 351-53, there is an illuminating discussion of this topic. It has been pointed out that ‘void’ is meaningless in an absolute sense; and ‘unless the necessary proceedings are taken at law to establish the cause of invalidity and to get it quashed or otherwise upset, it will remain as effective for its ostensible purpose as the most impeccable of orders’. In the words of Lord Diplock, “the order would be presumed to be valid unless the presumption was rebutted in competent legal proceedings by a party entitled to sue”. [Ed.: Hoffman-La Roche v. Secy. of State for Trade and Industry, 1975 AC 295]”
(Emphasis Supplied)
10. In absence of challenging the Order-in-Original, no case is made out for interference. We decline interference for yet another reason. The Order-in-Original was issued on 06.01.2022. No appeal was preferred. The writ petition is also not filed within the stipulated time limit prescribed for preferring the appeal. The Supreme Court in Assistant Commissioner (CT) LTU, Kakinada v. Glaxo Smith Kline Consumer Health Care Ltd5has opined as under:
“19. We may now revert to the Full Bench decision of the Andhra Pradesh High Court in Electronics Corporation of India Ltd.(supra), which had adopted the view taken by the Full Bench of the Gujarat High Court in Panoli Intermediate (India) Pvt. Ltd.vs. Union of India & Ors.19 and also of the Karnataka High Court in Phoenix Plasts Company vs. Commissioner of Central Excise (AppealI), Bangalore20. The logic applied in these decisions proceeds on fallacious premise. For, these decisions are premised on the logic that provision such as Section 31 of the 1995 Act, cannot curtail the jurisdiction of the High Court under Articles 226 and 227 of the Constitution. This approach is faulty. It is not a matter of taking away the jurisdiction of the High Court. In a given case, the assessee may approach the High Court before the statutory period of appeal expires to challenge the assessment order by way of writ petition 19 AIR 2015 Guj 97 20 2013 (298) ELT 481 (Kar.) on the ground that the same is without jurisdiction or passed in excess of jurisdiction by overstepping or crossing the limits of jurisdiction including in flagrant disregard of law and rules of procedure or in violation of principles of natural justice, where no procedure is specified. The High Court may accede to such a challenge and can also nonsuit the petitioner on the ground that alternative efficacious remedy is available and that be invoked by the writ petitioner. However, if the writ petitioner choses to approach the High Court after expiry of the maximum limitation period of 60 days prescribed under Section 31 of the 2005 Act, the High Court cannot disregard the statutory period for redressal of the grievance and entertain the writ petition of such a party as a matter of course. Doing so would be in the teeth of the principle underlying the dictum of a threeJudge Bench of this Court in Oil and Natural Gas Corporation Limited (supra)…”
(Emphasis Supplied)
11. For these cumulative reasons, admission is declined and the writ petition is dismissed. No order as to costs.
Miscellaneous petitions pending, if any, shall stand closed.
Notes:
1 (2017) 1 SCC 622
2 (2011) 3 SCC 363
3 (1996) 1 SCC 435
4 (1990) 1 SCC 234
5 (2020) 19 SCC 681
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