High Court Refuses GST Writ, Directs Petitioner to Use Statutory Appeal Route

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Case Name:

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

WPT No. 84 of 2024

Date: 4th April 2025

Key Takeaways

• Alternative Remedy Rule: The High Court reiterated that when a statutory appeal process exists (here, under Section 107 of the CGST Act, 2017), writ petitions under Article 226 should not be entertained unless there are exceptional circumstances (like violation of natural justice).
• Maintainability vs. Entertainability: The court distinguished between whether a writ petition can be filed (maintainability) and whether the court should actually hear it (entertainability). Even if a writ is maintainable, the court may decline to entertain it if an alternative remedy exists.
• No Exceptional Circumstances: The court found no breach of natural justice or other exceptional grounds in this case.
• Petitioner Not Barred from Appeal: The petitioner can still file an appeal under Section 107, and the time spent in this writ will be considered for limitation purposes.

Issue

Should the High Court entertain a writ petition against a GST demand order when the petitioner has not exhausted the statutory appeal remedy under Section 107 of the CGST Act, 2017, and are there exceptional circumstances justifying such interference?

Facts

• Parties: Mayasheel Retail India Limited (petitioner) vs. State of Chhattisgarh and GST authorities (respondents).
• Dispute: The petitioner challenged a GST demand order dated 11.01.2021 and a recovery notice dated 27.02.2024, claiming they were not properly served with a show cause notice or given a personal hearing as required under Section 73 of the CGST Act, 2017.
• Timeline: The petitioner only became aware of the demand order after receiving the recovery notice in February 2024. They also argued that the assessment was reopened and the demands were dropped after their representation, but the original order was not withdrawn.
• Relief Sought: The petitioner wanted the High Court to quash the demand and recovery orders.

Arguments

Petitioner (Mayasheel Retail India Limited)

• The demand order was issued without a proper show cause notice under Section 73 of the CGST Act, 2017, and without a personal hearing.
• The summary of the show cause notice was sent by email, which is not a prescribed mode of service.
• The petitioner only learned of the order after the recovery notice.
• The assessment was reopened, and the demands were dropped, but the original order was not withdrawn.
• Cited the Supreme Court case: Commissioner of Central Excise vs. Singhai Sushil Kumar (2016) 13 SCC 223 to support maintainability of the writ petition.

Respondents (State of Chhattisgarh & GST Authorities)

• The petitioner had an effective alternative remedy under Section 107 of the CGST Act, 2017, which they did not use.
• The writ petition should not be entertained as the petitioner bypassed the statutory appeal process.
• Cited the principle that writ jurisdiction should not be invoked when an alternative remedy exists.

Key Legal Precedents

• Section 107, CGST Act, 2017: Provides for appeal to the Appellate Authority against any decision or order under the Act.
• Commissioner of Central Excise vs. Singhai Sushil Kumar (2016) 13 SCC 223: On maintainability of writ petitions.
• M/s Godrej Sara Lee Ltd vs. The Excise and Taxation Officer-cum-Assessing Authority and others (2023) 3 SCR 871: Distinguishes between maintainability and entertainability of writ petitions.
• Commissioner of Income Tax and others vs. Chhabil Dass Agarwal [2014] 1 SCC 603: High Courts should not entertain writs when an effective alternative remedy exists, except in exceptional cases.
• Assistant Commissioner of State Tax & Ors. vs. M/s Commercial Steel Limited (2021) 7 SCR 660: Reiterates the need to use statutory remedies unless exceptions apply.
• Other Supreme Court cases cited: K.S. Rashid and Sons vs. Income Tax Investigation Commission (AIR 1954 SC 207), Sangram Singh vs. Election Tribunal, Kotah (AIR 1955 SC 425), and several others, all reinforcing the discretionary nature of writ jurisdiction and the preference for statutory remedies unless there is a breach of natural justice or similar exceptional circumstances.

Judgement

• Decision: The High Court refused to entertain the writ petition, holding that the petitioner had not made out an exceptional case for bypassing the statutory appeal process under Section 107 of the CGST Act, 2017.
• Reasoning: The court found no breach of natural justice or other exceptional grounds. The petitioner should pursue the statutory appeal remedy.
• Order: The writ petition was disposed of. The court clarified that the petitioner is not precluded from filing a statutory appeal, and the time spent in this writ will be considered for limitation purposes by the appellate authority.

FAQs

Q1: Can a writ petition be filed against a GST demand order without using the appeal process?

A: Generally, no. The High Court will not entertain a writ petition if an effective statutory appeal remedy exists, unless there are exceptional circumstances like a breach of natural justice.

Q2: What are “exceptional circumstances” for entertaining a writ petition?

A: These include situations where the statutory authority has not followed the law, violated principles of natural justice, or used repealed provisions.

Q3: What happens to the petitioner now?

A: The petitioner can still file an appeal under Section 107 of the CGST Act, 2017. The time spent in this writ petition will be considered when calculating the limitation period for the appeal.

Q4: Did the court decide on the merits of the GST demand?

A: No. The court only decided whether to entertain the writ petition, not on the merits of the demand itself.

Q5: What is the significance of this judgment?

A: It reinforces the principle that statutory remedies must be exhausted before approaching the High Court under Article 226, except in rare cases.