Court dismisses GST writ petition - company must use statutory appeal route first

Get the full picture - access the original judgement of the court order here

Case Name

Mayasheel Retail India Limited vs. State of Chhattisgarh & Others (High Court of Chhattisgarh at Bilaspur)

WPT No. 84 of 2024

Date: 4th April 2025

Key Takeaways

• Alternative remedy rule reinforced: Courts won’t entertain writ petitions when statutory appeal mechanisms exist and haven’t been exhausted
• GST appeals must be pursued first: Companies facing GST demands should use Section 107 appeals before approaching High Courts
• Natural justice violations alone insufficient: Even if procedural violations occurred, courts may still refuse to hear cases if alternative remedies exist
• Discretionary jurisdiction: High Courts have discretion in entertaining writ petitions but should exercise restraint when statutory forums are available

Issue

Should the High Court entertain a writ petition challenging a GST demand order when the petitioner has not exhausted the statutory appeal remedy available under Section 107 of the CGST Act, 2017?

Facts

The Players:

• Petitioner: Mayasheel Retail India Limited (a retail company with operations in Chhattisgarh and Haryana)
• Respondents: State of Chhattisgarh and its tax officials

The Timeline:

1. January 11 & 15, 2021: Tax authorities issued a demand order and Form DRC-07 against the company
2. February 27, 2024: A recovery notice was issued - this is when the company claims they first learned about the demand order
3. January 2024: Interestingly, the same tax authorities reopened the assessment through fresh scrutiny notices (Form GST ASMT-10 dated 05.01.2024 and Form GST DRC-01 dated 30.01.2024)
4. 2024: The company participated in the reopened proceedings and the authorities dropped the demands entirely after considering their representations
5. 2024: Despite the demands being dropped in the fresh proceedings, the authorities refused to withdraw the original 2021 order and recovery notice

Arguments

Petitioner’s Arguments:

The company made several compelling arguments:

1. No proper notice: They claimed the demand order was issued without a proper show cause notice under Section 73 of the CGST Act
2. No personal hearing: They argued they weren’t given a personal hearing before the order was passed
3. Improper service: The summary of show cause notice was sent via email, which they claimed wasn’t a prescribed mode of service
4. Double jeopardy: The same issue was reopened by authorities in 2024, they participated, and the demands were dropped - so why keep the old order alive?
5. Maintainability: They cited Commissioner of Central Excise vs. Singhai Sushil Kumar reported in (2016) 13 SCC 223 to argue that writ petitions are maintainable in such cases

State’s Arguments:

The government’s position was straightforward:

1. Alternative remedy available: The company had a statutory appeal remedy under Section 107 of the Chhattisgarh Goods & Services Tax Act, 2017, which they didn’t use
2. Suppression of facts: They accused the company of suppressing the availability of alternative remedies in their petition
3. Not maintainable: The petition should be dismissed as the company rushed to court without exhausting statutory remedies

Key Legal Precedents

The court relied heavily on several important precedents:

Supreme Court Cases:

1. M/s Godrej Sara Lee Ltd vs The Excise and Taxation Officer-cum-Assessing Authority and others, reported in (2023) 3 SCR 871 - This case explained the difference between ‘maintainability’ and ‘entertainability’ of writ petitions
2. Commissioner of Income Tax and others vs. Chhabil Dass Agarwal, reported in [2014] 1 SCC 603 - Established that non-entertainment of writ petitions when alternative remedies exist is a rule of self-imposed limitation and discretion
3. Assistant Commissioner of State Tax & Ors. Versus M/s Commercial Steel Limited reported in 2021 7 SCR 660 - The Supreme Court specifically held that when statutory remedy under Section 107 of CGST Act is available, writ petitions should not be entertained

Constitutional Bench Decisions:

The court also referenced several Constitution Bench cases including:

• K.S. Rashid and Sons vs. Income Tax Investigation Commission AIR 1954 SC 207
• Sangram Singh vs. Election Tribunal, Kotah AIR 1955 SC 425
• Union of India vs. T.R. Verma AIR 1957 SC 882
• State of U.P. vs. Mohd. Nooh AIR 1958 SC 86
• K.S. Venkatraman and Co. § Ltd. vs. State of Madras AIR 1966 SC 1089

Other Important Cases:

The judgment also cited numerous other precedents including N.T. Veluswami vs. G. Raja Nainar AIR 1959 SC 422, Municipal Council, Khurai vs. Kamal Kumar 1965 (2) SCR 653, and several others

Judgement

The Court’s Decision:

The court dismissed the writ petition, but here’s the nuanced reasoning:

Legal Framework:

The court made an important distinction between two concepts:

• Maintainability: Whether a court has jurisdiction to hear a case
• Entertainability: Whether a court should exercise its discretion to hear a case

Court’s Reasoning:

1. Petition is maintainable: The court acknowledged that the writ petition was technically maintainable under Article 226 of the Constitution
2. But not entertainable: However, the court refused to entertain it because:

• A statutory appeal under Section 107 of the CGST Act, 2017 was available
• The company hadn’t made out an “exceptional case” warranting court intervention
• The order dated 11.01.2021 was clearly appealable under Section 107(1)

1. No exceptional circumstances: The court found no violation of natural justice or extraordinary circumstances that would justify bypassing the statutory appeal route

Final Orders:

1. Writ petition dismissed: The petition was disposed of without being entertained
2. Appeal route remains open: The company can still file a statutory appeal under Section 107
3. Time consideration: If they do appeal, the appellate authority should consider the time spent on this writ petition when examining limitation issues
4. No merit observations: The court clarified it made no observations on the actual merits of the company’s claims

FAQs

Q1: Does this mean the company has no remedy at all?

A: Not at all! The company can still file an appeal under Section 107 of the CGST Act, 2017. The court specifically said this dismissal doesn’t prevent them from pursuing statutory remedies.

Q2: Why didn’t the court just decide the case on merits since the company raised valid points about natural justice?

A: The court follows a principle of judicial restraint. When Parliament has created a specific statutory mechanism (appeals under Section 107), courts prefer that citizens use those channels first rather than bypassing them to come directly to court.

Q3: What about the time limitation for filing an appeal - hasn’t too much time passed?

A: The court specifically directed that if the company files an appeal now, the appellate authority should consider the time spent on this writ petition when examining whether the appeal is within the time limit.

Q4: The company argued they never got proper notice - doesn’t that matter?

A: While the court acknowledged these arguments, it didn’t decide on their merit. The court’s position is that these factual and legal issues should be decided by the appellate authority first, not by the High Court in its writ jurisdiction.

Q5: What’s the difference between ‘maintainable’ and ‘entertainable’ that the court kept mentioning?

A: Think of it this way - ‘maintainable’ means “Can the court legally hear this case?” (answer: yes). ‘Entertainable’ means “Should the court choose to hear this case?” (answer: no, because there are other proper channels available).

Q6: Does this set any new legal precedent?

A: Not really. This judgment reinforces existing law that courts should generally not entertain writ petitions when effective statutory appeal mechanisms exist. It’s more of an application of well-established principles to GST matters.

Q7: What should other taxpayers learn from this case?

A: The key lesson is to exhaust statutory remedies first. If you have a GST dispute, file your appeal under Section 107 before approaching the High Court. Only in truly exceptional cases involving serious procedural violations should you consider going directly to court.