Statutory remedy of appeal should be availed before invoking writ jurisdiction

The Jharkhand High Court has ruled that a statutory remedy of appeal must be pursued before resorting to writ jurisdiction for Goods and Services Tax (GST) disputes. In a case involving a challenge to a GST demand notice, the court found that the petitioner had an available appeal route under Section 107 of the CGST Act. The court emphasised that complex issues, including those concerning the merits of the case and natural justice, should be addressed through the appellate process.

The Hon'ble Jharkhand High Court in the case of Sursarita Vanijya (P.) Ltd. v. Principal Commissioner of Central Goods and Services Tax [Writ Petition (T) No. 1598 of 2024 dated September 02, 2024] disposed of the writ petition challenging the GST demand issued in Form GST DRC-07 on the ground that Input Tax Credit ("ITC") had been availed in contravention of Section 16(2)(c) of the Central Goods and Services Tax Act, 2017 ("the CGST Act"), directing the assessee to avail the statutory remedy of appeal under Section 107 of the CGST Act and held that various issues had been pointed out regarding merit as also violation of principle of natural justice.

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.

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