GST demand on Infrastructure Development Cess and Environment Cess challenged through writ petition dismissed under Section 107

The Chhattisgarh HC dismissed a writ petition challenging GST demand on Infrastructure Development Cess and Environment Cess, ruling that an alternate efficacious remedy exists under Section 107 of the GST Act. The petitioner argued that appellate authorities' adherence to departmental circulars would prejudice their appeal and violate natural justice principles. The court held that the legal issue regarding GST liability nexus with cess can be adequately examined by the appellate authority, and the petitioner's specific legal contentions are not bound by circulars. Citing SC precedent, the court directed the petitioner to pursue the statutory appeal remedy under Section 107 within prescribed timelines.

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Issues Involved:
1. Legality, validity, and propriety of the order confirming GST demand.
2. Maintainability of the writ petition in light of the alternate remedy of appeal under Section 107 of the GST Act.

Issue 1: Legality, Validity, and Propriety of the GST Demand Order
The petitioner, a public limited company engaged in the manufacture and supply of cement, challenged the order dated 26.09.2023 by the Additional Commissioner (CGST and Central Excise), Raipur, which confirmed the demand for GST amounting to Rs. 14,35,54,944/- (CGST Rs. 7,17,77,472/- + SGST Rs. 7,17,77,472/-) along with interest and penalty on the Development Cess and Environment Cess. The petitioner argued that the cesses paid under the Chhattisgarh (Adhosanrachna Vikas Evam Paryavaran) Upkar Adhiniyam, 2005, should not attract GST as there was no element of consideration or supply to attract GST under Section 7 of the GST Act. The petitioner contended that the state government was undertaking infrastructure and environment projects for the benefit of its citizens, not specifically for the petitioner.

Issue 2: Maintainability of the Writ Petition
The respondent argued that the petitioner had an alternate remedy of filing an appeal against the order of the Additional Commissioner as provided under Chapter XVIII of the GST Act, 2017, and thus, the writ petition was not maintainable. The petitioner countered that the appellate authority would be bound by departmental circulars under Section 168 (1) of the GST Act, making the appeal a mere formality and prejudiced against the principle of natural justice. The petitioner cited Supreme Court judgments in M/s Filterco and Another vs Commissioner of Sales Tax, Madhya Pradesh and Another and M/s Godrej Sara Lee Ltd. vs. The Excise and Taxation Officer-cum-Assessing Authority and Others to argue that the High Court should examine the merits of the case despite the availability of an alternate remedy.

Court's Decision
The court held that the writ petition was not maintainable due to the availability of an alternate and efficacious remedy of appeal under Section 107 of the GST Act. The court directed the petitioner to file an appeal within 30 days, ensuring that neither the appellate authority nor the respondents would take the plea of limitation. The appellate authority was instructed to decide the appeal on its merits without being influenced by the court's observations. The court did not go into the merits of the case but focused on the issue of alternate remedy available to the petitioner.

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