Alternative remedy under Section 107 must be exhausted before challenging tax collection through writ petition

SC dismissed writ petition filed under Article 226 challenging tax and penalty collection in inter-State sale case. Court held that respondent had statutory remedy under Section 107 which should have been pursued first. While alternative remedy is not absolute bar to writ jurisdiction, exceptions requiring breach of fundamental rights, natural justice violation, jurisdictional excess, or constitutional challenge were not established. No natural justice violation occurred as proper notice was served. HC inappropriately entertained petition based on surmises rather than relegating matter to appellate authority for factual assessment.

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Issues:
Appeal from High Court judgment setting aside tax and penalty collection under CGST and SGST Acts, direction for refund with interest, and disciplinary action against Assistant Commissioner.

Analysis:
1. High Court Judgment: The High Court, under Article 226, set aside tax and penalty collection by the appellants, directing a refund with interest and ordering disciplinary proceedings against the Assistant Commissioner. The case involved a business concern engaged in iron and steel trade, intercepted while transporting goods from Karnataka to Telangana, leading to a dispute over tax evasion.

2. Grounds for High Court Decision: The High Court found no evidence of an attempt to evade CGST and SGST, emphasizing the possibility of the driver getting lost, justifying the interception. The Court highlighted that mere suspicion of local sale does not warrant such actions, leading to the refund order and disciplinary directions.

3. Challenges to High Court Judgment: The appellant contended that the High Court erred in entertaining the writ petition under Article 226, emphasizing the availability of statutory remedy under Section 107 of the CGST Act. The appellant argued that the High Court based its decision on assumptions rather than facts.

4. Statutory Remedy Under Section 107: Section 107 provides for appeals against decisions under the CGST Act within three months, requiring payment of admitted tax amounts and a percentage of disputed tax for filing an appeal. The respondent failed to avail this statutory remedy, opting for a writ petition instead.

5. Court's Decision: The Supreme Court allowed the appeal, setting aside the High Court's order and dismissing the respondent's writ petition. The Court emphasized the importance of exhausting statutory remedies before seeking judicial intervention under Article 226, refraining from commenting on the merits of the case.

6. Final Verdict: The respondent was directed to pursue remedies under Section 107 of the CGST Act for addressing grievances against the state's actions. The Court's decision highlighted the significance of following statutory procedures before resorting to writ petitions, ensuring proper adjudication and assessment of facts by the appellate authority.

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