2025 (1) TMI 515 - HC - GST

Tax officer's Section 74 order upheld as petitioners must exhaust statutory appeal under Section 107 before approaching HC

Abhinaya Constructions, Rep. by its Proprietor C.N. Raja (M/A. 61) Versus State of Tamil Nadu, The State Tax Officer

The Madras HC dismissed writ petitions challenging a tax officer's order under Section 74 of the Tamil Nadu GST Act, 2017, which determined tax payable by ... Refusal to entertain the writ petitions, in view of the alternative remedy that is available under Section 107 of the Tamil Nadu Goods and Services Tax Act, 2017 - challenge to order of the State Tax Officer, Divisional Central Investigating Wing – 2 by which the Officer passed an order under Section 74 of the Tamil Nadu Goods and Services Tax Act, 2017 determining the tax payable by the appellant - proper officer to pass the order - HELD THAT:- Section 74 enables the Proper Officer to issue show cause notice to an assessee, if it appears to him or her, that any tax has not been paid or short paid or erroneously refunded or where input tax credit has been wrongly availed or utilized by reason of fraud, or any wilful misstatement or any like reason to issue a show cause notice as to why he should not be directed to pay the amount along with interest and penalty and Section 74(9) enables the Proper Officer to determine the amount of tax payable and issue an order. The remedy under Article 226 of the Constitution of India is available to every citizen and no legislation can put fetters on exercise of power by the High Court under Article 226 of the Constitution of India - The condition requiring deposit of the entire tax payable may appear to be onerous, but, the enactment involved is taxing statute and therefore we cannot go by the onerousness or otherwise of the condition imposed. Once it is found that there is effective alternative remedy, as the matter of self-imposed restriction and judicial discipline, the High Court will have to necessarily direct the parties to invoke such alternative remedy instead of the constitutional remedy. Conclusion - The writ Court was justified in refusing to exercise jurisdiction and directing the appellant to avail of the statutory remedy by way of appeal under Section 107 of the Act. Appeal dismissed. 1. ISSUES PRESENTED and CONSIDEREDThe judgment addresses the following core legal issues:Whether the State Tax Officer who passed the order under Section 74 of the Tamil Nadu Goods and Services Tax Act, 2017, was appropriately authorized as an 'Adjudicating Authority' under the Act.Whether the appellant can bypass the statutory appellate remedy under Section 107 of the Tamil Nadu Goods and Services Tax Act, 2017, by invoking the writ jurisdiction of the High Court under Article 226 of the Constitution of India.Whether the delegation of authority by the Commissioner to the State Tax Officer was valid under the provisions of the Act.2. ISSUE-WISE DETAILED ANALYSISIssue 1: Authorization of the State Tax OfficerRelevant Legal Framework and Precedents: Section 2(4) of the Tamil Nadu Goods and Services Tax Act, 2017, defines 'Adjudicating Authority,' and Section 2(91) defines 'Proper Officer.' Section 5 outlines the powers of officers under the Act.Court's Interpretation and Reasoning: The court found that the Commissioner has the authority to designate any officer as a 'Proper Officer' under Section 2(91) and Section 5, thereby empowering them to act as an Adjudicating Authority.Key Evidence and Findings: The court considered the statutory provisions and the notification issued by the Commissioner under Section 5(1) of the Act.Application of Law to Facts: The court determined that the delegation of authority to the State Tax Officer was consistent with the Act's provisions.Treatment of Competing Arguments: The appellant argued that the officer was not properly authorized, but the court rejected this, citing the Commissioner's power to designate officers.Conclusions: The court concluded that the officer was properly authorized under the Act.Issue 2: Invoking Writ JurisdictionRelevant Legal Framework and Precedents: Article 226 of the Constitution of India provides for writ jurisdiction, while Section 107 of the Act provides an appellate remedy.Court's Interpretation and Reasoning: The court emphasized that writ jurisdiction is not a substitute for statutory remedies unless the alternative remedy is ineffective or unavailable.Key Evidence and Findings: The court noted the appellant's attempt to bypass the statutory appeal process due to the onerous conditions of deposit under Section 107(6).Application of Law to Facts: The court found that the statutory remedy was effective, and the conditions of deposit did not justify bypassing it.Treatment of Competing Arguments: The appellant argued that the deposit requirement was burdensome, but the court held that this did not render the appellate remedy ineffective.Conclusions: The court concluded that the writ jurisdiction was not appropriate in this case.Issue 3: Validity of Delegation by the CommissionerRelevant Legal Framework and Precedents: Sections 2(91) and 5 of the Act allow the Commissioner to delegate powers to officers.Court's Interpretation and Reasoning: The court upheld the delegation as consistent with the statutory framework.Key Evidence and Findings: The court referenced the notification issued by the Commissioner under Section 5(1).Application of Law to Facts: The court applied the statutory provisions to affirm the validity of the delegation.Treatment of Competing Arguments: The appellant's challenge to the delegation was dismissed based on the clear statutory authority.Conclusions: The delegation was valid under the Act.3. SIGNIFICANT HOLDINGSPreserve Verbatim Quotes of Crucial Legal Reasoning: 'The enactment involved is a taxing statute and therefore we cannot go by the onerousness or otherwise of the condition imposed.'Core Principles Established: The court reiterated the principle that writ jurisdiction should not be used to bypass statutory remedies unless those remedies are ineffective or unavailable. It also affirmed the Commissioner's authority to delegate powers under the Act.Final Determinations on Each Issue: The court dismissed the appeals, upholding the writ court's decision to refuse jurisdiction and directing the appellant to pursue the statutory appellate remedy.The judgment emphasizes adherence to statutory remedies and the proper delegation of authority within the framework of the Tamil Nadu Goods and Services Tax Act, 2017. It also highlights the limits of writ jurisdiction in the context of tax disputes. The appellant was granted an additional eight weeks to file appeals without reference to the question of limitation, allowing the appellate authority to address the merits of the case, including the validity of the authorization.