Writ Jurisdiction: An Umbrella of Remedy Against Flagrant Action of GST Authorities.
1. Introduction
1.1 Writ jurisdiction of High Court and the Supreme Court of India provided under part III of the Constitution of India. Any citizen whose fundamental or Legal rights are being violated by the State machinery can knock the door of High Court under Article 226 or the Supreme Court under Article 32.
1.2 In the realm of GST law, it is often seen that Show Cause Notice (“hereinafter referred to as SCN”) issued or orders passed by quasi-judicial authorities are without following the settled principles of law and sometimes even without recording the reasons as to why an adverse order has been passed by authority concerned.
1.3 The Hon’ble Delhi High Court vide W.P (C) 4718/2024 & CM APPL. 19296/2024 in the case of BONA VITA TECHNOLOGIES PVT LTD versus THE SALES TAX OFFICER CLASS-II AVATO WARD 94 ZONE 8 NEW DELHI-110002, has set aside the order passed by authority without recording proper finding.
1.4 Writ jurisdiction has been playing pivotal role in rendering justice where no efficacious remedy available to a person whose rights have been violated or where the procedure establish by law has not been followed or in the cases where perverse finding recorded by any court or tribunal and authority.
2. Types of Writs under the Constitution of India
2.1 Under the constitution of India there are five types of Writs that can be issued by the Supreme Court under Article 32 and by the High Court under Article 226 of the Constitution of India. The Writs under the constitution of India provided as follows:
i. Writ of Habeas Corpus:
The Writ of Habeas Corpus is a mechanism to secure release of a person when someone is unlawfully detained by State. The Court has power to issue said writ if State has unlawfully detained someone.
ii. Writ of Certiorari:
The Writ of Certiorari is issued by the courts to keep the inferior courts, tribunals and administrative authorities within their jurisdiction. The Writ can be issued by the High Court and the Supreme Court when any judgement or order is passed by inferior court, tribunals and authorities illegally or arbitrarily or if there is an error apparent on the face of record.
iii. Writ of Mandamus:
The Writ of Mandamus issued by a competent High Court to any person, corporation or inferior court which are acting in the nature of public duty to act as per an order issued by the court to perform its duty.
iv. Writ of Prohibition:
The Writ of prohibition issued by a superior court to an inferior court when they acted without jurisdiction or in excess of their jurisdiction.
v. Writ of Qua Warranto:
The Writ of qua warranto is a writ which lies against the person, who according to the relator is not entitled to hold an office of public nature and is only usurper of the office. It is the person against whom the writ of qua warranto directed, and the person is required to show by what authority that person is entitled to hold the office in question.
3. Writ Jurisdiction of High Court under Article 226 and 227 vis-à-vis Writ of Certiorari
3.1 The article 226 of the constitution of India confers powers upon the High Court to issue Writs against a public authority; when there is a violation of the statutory rights of a person.
3.2 Whereas, article 227 of the constitution of India provides powers to High Court to supervise all the subordinate Courts and administrative authorities within its territorial jurisdiction.
3.3 The writ of certiorari may be issued by High Court against an order or judgement issued by subordinate Courts as well as administrative authority in the following circumstances:
a. When order or judgement passed without jurisdiction.
b. When order or judgement passed in excess of jurisdiction that is by overstepping and over exercising its jurisdiction.
c. When an order or judgement is passed in flagrant disregard of the law as well as overreaching the established procedure.
d. When order or judgment passed in gross violation of principles of natural
e. When a finding of fact is recorded without evidence that would be regarded as an error of law which can be corrected by way of issuance of writ of certiorari.
3.4 The writ of certiorari can issue by High Court. If, there is an error apparent on the face of record. An error could not be said to be apparent on the face of record if one has to travel beyond the records of proceedings against which writ has been filed. The error has to be so obvious that, the court should not be hesitant to issue Writ and quash the order.
4. Alternate Remedy Is No Bar to Invoke Writ jurisdiction under Article 226
4.1 The Goods and Services Tax Act, 2017 has a self-contained provision for filing appeal against an order passed by adjudicating authorities. Generally, the Writ Court is not inclined to issue Writs when there is an alternate remedy available in a statue. Despite alternate remedy there are a few exceptions to this rule:
i. The writ has been filed for enforcement of fundamental rights guaranteed under part III of the constitution of India.
ii. Where there has been violation of principles of natural justice.
iii. The orders or proceedings are wholly without jurisdiction.
4.2 The Hon’ble Supreme Court of India in its verdict pronounced in the case of Radha Krishan Industries v. State of Himachal Pradesh. The court has not just elaborated that the Commissioner cannot exercise power under section 83 of the CGST Act, 2017 without forming an opinion, that too based on tangible material but also reiterated by following its earlier decisions in the case of Seth Chand Ratan v. Pandit Durga Prasad, Babubhai Muljibhai Patel v. Nandlal Khodidas Barot and Rajasthan SEB v. Union of India that High Court can exercise its jurisdiction under Article 226 even if there is alternate remedy available.
5. Challenge to Show Cause Notice by invoking Writ jurisdiction under Article 226
5.1 Generally High Courts are hesitant to issue Writ at the stage of SCN itself. However, there is no bar on High Court that Writ could not be issued at SCN stage. Writ under Article 226 can be issued by High Court on the ground discussed hereinbelow:
A. Where a SCN issued without following statutory mandate
i. Its settled principle of the law that if shall presumption is employed in a provision; something has to be done in that manner only.
ii. In the case of GULATI ENTERPRISES versus CENTRAL BOARD OF INDIRECT TAXES AND CUSTOMS the Hon’ble Delhi High Court has intervened at the stage of SCN itself and quashed the SCN issued by GST authority. The issue involved in the case was that an SCN was issued by the authority in form DRC-01 period prior to 15-10-2020, without issuance of pre-consultation notice.
iii. Furthermore, prior to 15-10-2020, the rule 142(1A) employed shall presumption with regard to the issuance of pre-consultation notice which was changed after 15-10-2020 with may presumption. Accordingly, SCN was quashed by Hon’ble Delhi High Court for not following the statutory mandate under the law.
6. Challenge to Order Passed by GST authority by invoking Writ Jurisdiction under Article 226
A. Under the GST law once adjudication proceedings are completed an order needs to be passed by authority concerned. If a taxpayer does not agree with the order passed by adjudicating authority one may file appeal against the order before first appellate authority which is Joint Commissioner (Appeal) in states like Haryana and Delhi. However, there are various aspects of any case that are relevant and should be considered by adjudicating authority before passing order and also there are some principles of natural justice which shall be followed in every case.
B. If, requirement of these two aspects is not fulfilled by adjudicating authority in those cases a Writ can be entertained by High Court regardless of alternate remedy of appeal before first appellate authority.
A. Challenge to an order passed without considering procedural error
i. Under the GST regime, input tax credit is a highly litigated area. In order to claim input tax credit, there are a lot of check points which have to keep in mind by a registered person.
ii. There are various legislative requirements, such as conditions prescribed under sections 16 and 17. After fulfilling all these conditions, there are a lot of procedural requirements such as filing of returns by a registered person, depositing of tax by the corresponding supplier etc.
iii. After making sure all these conditions, if a single procedural error is committed not by a registered person, even if it is committed by corresponding supplier. The authority under the law straight away without considering any aspect will reject the claim of a registered person.
iv. In the case of BRAUN MEDICAL INDIA PVT LTD v. UNION OF INDIA & ORS. The petitioner holding two GSTINs one for Delhi location and another for Maharashtra. During the disputed period it has availed input tax credit on purchases made in Delhi location. However, corresponding supplier inadvertently mentioned GSTIN of the Maharashtra location but registered person availed input tax credit based on actual inward supplies and invoices.
v. Despite of the fact that supplies were received in the Delhi location the authority has rejected the claim of input tax credit availed by the petitioner. The petitioner approached the Delhi High Court under Articles 226 and 227 by way of filing Writ petition, the court has allowed the petition and held that the petitioner rightly availed input tax credit. Consequently, order passed by GST authority set aside by the Hon’ble Delhi High Court.
7. Conclusion:
7.1 Writ jurisdiction is the most sought remedy, to deal with mechanical use of discretionary power vested in administrative authority which are performing a function of quasi- judicial authority. However, writ jurisdiction is not unlike of Appellate jurisdiction wherein the Court has power to take evidence on record and verify merits of the case.
7.2 In spite of the fact, that High Court cannot act as a court of appeal under Article 226. Though, they are within their limits can render justice if, principle of natural justice has not been followed or when there was flagrant disregard of statutory provisions which caused mis-carriage of justice to petitioner.
7.3 On concluding note, writ jurisdiction has been playing a pivotal role in maintaining checks and balances between powers vested within the authority and rights of taxpayers along with a fair process of adjudication.
About the Author
The author is Ruchika Bhagat, FCA helping foreign companies in setting up and closing businesses in India and complying with various tax laws
applicable to foreign companies while establishing a business in India. Neeraj Bhagat & Co. Chartered Accountants is a well-established Chartered Accountancy firm founded in the year 1997 with its head office in New Delhi.
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