Writ Petition Dismissed for Challenging Penalty Order; No Natural Justice Violation Found Under CGST Act Section 107

The HC dismissed the writ petition challenging the assessment cum penalty cum interest order, holding there was no violation of natural justice. The petitioner received show-cause and hearing notices and submitted objections disputing facts without requesting copies of seized material. The Court found the petitioner had knowledge of the seized slips and did not seek the material's supply, distinguishing the case from precedents requiring furnishing of enforcement reports. The HC noted it cannot re-examine factual disputes under Article 226 and emphasized the petitioner's right to appeal under Section 107 of the CGST Act, 2017. The petitioner was allowed to avail the statutory remedy, with the writ petition's pendency period to be set off for limitation purposes. Petition dismissed.

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Issues Involved:
1. Violation of principles of natural justice.
2. Arbitrary assessment and imposition of tax, penalty, and interest.
3. Maintainability of the writ petition under Article 226 of the Constitution of India.

Detailed Analysis:

1. Violation of Principles of Natural Justice:
The petitioner contended that the impugned assessment order was passed without furnishing copies of the material relied upon, violating the principles of natural justice. The petitioner argued that the material seized during the inspection was not provided with the show-cause notice, preventing the petitioner from filing a suitable reply. The petitioner cited multiple judicial precedents to support this claim. However, the court noted that the petitioner did not request the material in the objections filed and had knowledge of the contents of the slips. The court held that the petitioner failed to establish a violation of natural justice as the material was seized from the petitioner's premises, and the petitioner had opportunities to respond.

2. Arbitrary Assessment and Imposition of Tax, Penalty, and Interest:
The petitioner challenged the assessment on the grounds of arbitrariness and incorrect figures. The first respondent conducted an inspection, seized slips, and issued a show-cause notice stating that the petitioner did not account for certain purchases and sales, leading to tax evasion. The petitioner argued that some slips did not relate to them and some transactions were already recorded in the books. The court observed that the petitioner had the opportunity to raise these issues during the assessment process and failed to do so effectively. The court also noted that disputed questions of fact could not be addressed under Article 226.

3. Maintainability of the Writ Petition under Article 226:
The petitioner argued that the writ petition was maintainable due to the violation of natural justice and the onerous condition of statutory deposit for an appeal. The respondent contended that the petitioner had an alternative remedy of appeal under Section 107 of the CGST Act. The court referred to the Supreme Court's decision in Chand Ratan v. Durga Prasad, emphasizing that when a statute prescribes a remedy, it must be exhausted before seeking a writ. The court concluded that the petitioner had an alternative remedy and failed to prove a violation of natural justice, making the writ petition unsustainable.

Conclusion:
The court dismissed the writ petition, holding that the petitioner had an alternative remedy of appeal and failed to establish a violation of the principles of natural justice. The court allowed the petitioner to avail the statutory remedy, with the period of pendency of the writ petition to be set-off while calculating the period of limitation for the appeal.

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