2024 (2) TMI 809 - HC - GST

GST Demand Notice Challenge Rejected: Petitioner Directed to Pursue Statutory Appeal Under Section 107(6) of CGST Act

Kudroli Builders And Infrastructure Pvt. Ltd. Thr. Managing Director, Ahmed Shafi Versus State of Goa Thr. Secretary And Others

The HC examined a GST demand notice challenge, finding the petitioner has an available appeal remedy under Section 107(6) of the CGST Act. The court ... Maintainability of petition - availability of alternative remedy - Validity of demand notice dated 13/9/2023 and the order dated 23/12/2023 - demand of GST from the Petitioner - HELD THAT:- This Petition need not be entertained, leaving it open to the Petitioner to avail of the alternate remedies under the CGST Act. This Petition is not entertained, but the Petitioner is granted liberty to avail of the alternate and efficacious remedy available under the CGST Act - petition disposed off. ISSUES PRESENTED AND CONSIDERED 1. Whether the writ petition challenging a demand notice and a subsequent order confirming a Goods and Services Tax (GST) demand should be entertained, or whether the petitioner must be relegated to the statutory appellate remedy under Section 107(6) of the Central Goods and Services Tax Act, 2017 (CGST Act). 2. Whether the question of liability for GST - specifically the contention that GST is either not payable or, if payable, payable by the end user (the State) - is a matter that can be adjudicated by the appellate authority under the CGST Act or requires determination by the High Court in writ jurisdiction. 3. Whether the petitioner is protected against limitation in instituting an appeal given uncertainty about when the Goods and Services Tax Appellate Tribunal (the Tribunal) would become functional, and the legal consequences of the Principal Bench decision on computation of limitation. ISSUE-WISE DETAILED ANALYSIS Issue 1 - Forum and Relief: Entertainability of Writ Petition vs. Relegation to Statutory Appeal Legal framework: The CGST Act provides a statutory right of appeal under Section 107(6) to challenge orders of tax authorities. Writ jurisdiction is discretionary and generally not to be exercised where efficacious alternative statutory remedies exist. Precedent Treatment: The Court relied on the principle that statutory remedies should be availed of and that writ jurisdiction is not ordinarily to be used to circumvent the appellate machinery established by statute. No attempt was made to overrule or distinguish specific precedents denying writs where appellate remedies exist. Interpretation and reasoning: The Court held that the impugned demand order (which subsumed the earlier demand notice) is an order amenable to appeal under Section 107(6). The Court reasoned that all issues raised in the petition, including substantive liability questions, can be examined by the appellate authority. Exercising judicial restraint, the Court concluded that the petition need not be entertained and the petitioner should be relegated to the statutory appeal, subject to any limitation protections discussed separately. Ratio vs. Obiter: Ratio - Writ relief is declined where an efficacious statutory appeal exists under the CGST Act; the proper forum to decide the impugned demand is the appellate authority contemplated by the Act. Obiter - none relevant beyond application of the general principle of forum appropriateness. Conclusions: The petition is not entertained on the ground of availability of an alternate statutory remedy; the petitioner is granted liberty to file the statutory appeal and all contentions are left open to be decided by the appellate authority. Issue 2 - Competence of Appellate Authority to Determine Liability Questions (End-user Liability / Non-payability) Legal framework: Appeals under the CGST Act allow the appellate authority to re-examine legal and factual issues arising from tax orders, including questions of who bears the tax burden and whether tax is payable at all. Precedent Treatment: The Court did not distinguish or overrule any authority that allocates such questions to the appellate mechanism; rather, it affirmed that the appellate authority can address these substantive issues. Interpretation and reasoning: The Court observed that the petitioner's argument that GST, if payable, should be borne by the end user (the State) is a substantive question within the competence of the appellate authority. There was no basis to bypass the statutory route merely because the issue raises a potentially complex legal question about incidence of tax. Ratio vs. Obiter: Ratio - Substantive questions of tax liability, including incidence (end-user liability) or non-payability, are appropriately decided by the appellate authority under the CGST Act and do not, by themselves, justify circumventing the statutory appeal. Obiter - remarks that the appellate authority 'can always go into' such issues are reinforcing but not separate legal holdings. Conclusions: The petitioner may raise the end-user liability and non-payability contentions before the appellate authority; the High Court leaves all such contentions open for adjudication by that forum. Issue 3 - Limitation and Operational Status of the Goods and Services Tax Appellate Tribunal Legal framework: Limitation to institute an appeal ordinarily runs from the date of the impugned order; however, where the appellate tribunal is not constituted or functional, equitable considerations and prior judicial directions may affect the computation of limitation. Precedent Treatment: The Court referred to a decision of the Principal Bench (noted in the record) holding that the period of limitation to institute an appeal would commence from the date the Tribunal is constituted and made fully operational. The Court treated that position as affording protection to the petitioner on the limitation point. Interpretation and reasoning: Recognising ambiguity about whether the Tribunal had been made operational, the Court placed reliance on an earlier order that (a) recorded the Government's statement that the Tribunal would likely be functional within a short period, and (b) indicated that limitation could be held in abeyance until constitution and functionality of the Tribunal. The Court observed that this sufficiently protects the petitioner and that, per counsel's submission, limitation has not expired as of the hearing. Ratio vs. Obiter: Ratio - Where the appellate tribunal is not yet constituted/functional, prior judicial direction and the principle in the referenced decision protect the petitioner from being time-barred; the petitioner retains the right to institute appeal once the Tribunal is functional. Obiter - procedural encouragement to consider instituting the appeal once the Tribunal is functional is advisory rather than a binding determination on limitation beyond the facts before the Court. Conclusions: The petitioner is protected on limitation grounds pending constitution and functionality of the Tribunal; the Court declines interlocutory relief and permits the petitioner to institute the statutory appeal within applicable limitation as protected by the noted position. Miscellaneous Procedural Findings and Directions Legal framework: Courts may permit amendments to pleadings and dispose of ancillary applications in the exercise of judicial management of matters. Interpretation and reasoning: The Court granted leave to amend the petition forthwith and disposed of the ancillary miscellaneous application. It granted liberty to invoke the statutory appeal and directed that, if filed, the appeal should be decided on its own merits in accordance with law. The Court left all parties' contentions open for consideration by the appellate authority. Ratio vs. Obiter: Ratio - Leave to amend and disposal of the ancillary application were granted; the petitioner's liberty to pursue the statutory appeal and the requirement that such appeal be decided on merits are binding directions. Obiter - none. Conclusions: Amendment permitted; ancillary application disposed of; petition dismissed without costs, with explicit liberty to pursue the statutory appellate remedy and all contentions left open for the appellate authority to decide.