Tax Assessment Challenge Dismissed: Statutory Appeal Pathway Mandatory Before Seeking Extraordinary Writ Relief

HC dismissed writ petition challenging tax assessment under GST Act. Court held statutory appellate remedy must be exhausted before invoking writ jurisdiction. No exceptional circumstances were demonstrated to bypass normal appeal process. Petitioner directed to pursue prescribed statutory appeal mechanism against tax order involving turnover adjustments and alleged evasion.

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1. ISSUES PRESENTED and CONSIDERED

The core legal questions considered by the Court in this matter are:

• Whether the petitioner was justified in bypassing the statutory appellate remedy and invoking the writ jurisdiction under Article 226 of the Constitution of India against the order passed under the Uttar Pradesh Goods and Services Tax Act, 2017.
• Whether the order impugned, which found evasion of turnover and levied tax, penalty, and interest, suffers from any violation of principles of natural justice or lack of jurisdiction.
• Whether the petitioner's challenge to the merits of the tax assessment and the findings on high sea sale and purchase adjustments in turnover can be entertained under writ jurisdiction without exhausting statutory remedies.

2. ISSUE-WISE DETAILED ANALYSIS

Issue 1: Jurisdiction to entertain writ petition under Article 226 despite availability of statutory remedy

Relevant legal framework and precedents: The Court referred to the well-established principle that jurisdiction under Article 226 of the Constitution of India is discretionary and to be exercised sparingly and only in exceptional circumstances, especially where an alternative statutory remedy is available. The Court relied on recent authoritative pronouncements, including the Supreme Court's decision in Jaipur Vidyut Vitran Nigam Limited vs. MB Power (MP) Limited (2024) 8 SCC 513, which reiterated the principle laid down in Radha Krishan Industries vs. State of H.P. (2021) 6 SCC 771. These decisions emphasize that where a statute creates a right and prescribes a remedy or procedure for enforcement, that remedy must be exhausted before invoking writ jurisdiction.

Court's interpretation and reasoning: The Court observed that the petitioner had an alternative statutory remedy of appeal against the order passed under the Uttar Pradesh GST Act, 2017. The petitioner did not demonstrate any extraordinary or exceptional circumstances warranting bypass of the statutory appellate process. The Court noted that mere assertion of constitutional rights to carry on trade and business or dissatisfaction with the order's merits does not justify invoking writ jurisdiction.

Key evidence and findings: The petitioner's pleadings did not substantiate claims of violation of natural justice or jurisdictional errors. The Court found these pleas to be unsubstantiated and existing only in form without material backing.

Application of law to facts: Given the availability of a statutory appeal and absence of exceptional grounds, the Court held that the writ jurisdiction was not properly invoked. The petitioner was directed to pursue the statutory remedy.

Treatment of competing arguments: The petitioner's argument that the writ petition was necessary to protect constitutional rights was considered but rejected on the basis that such rights are protected within the statutory framework and do not justify circumventing the prescribed appellate mechanism.

Conclusion: The Court declined to exercise writ jurisdiction, emphasizing the primacy of statutory remedies and the need for exceptional circumstances to invoke constitutional writ powers.

Issue 2: Merits of the order impugned relating to tax evasion and adjustments in turnover

Relevant legal framework and precedents: The order impugned was passed under Sections 61, 73, and 74 of the Uttar Pradesh Goods and Services Tax Act, 2017, which provide for scrutiny of returns, issuance of notices for discrepancies, and determination of tax evasion respectively. The statutory provisions mandate that discrepancies in returns and unaccounted adjustments in turnover can lead to tax demands with penalty and interest.

Court's interpretation and reasoning: The Court observed that the petitioner's claim regarding adjustments in turnover due to high sea sale and purchase was not reflected in monthly or annual returns, which formed the basis for the tax demand. The Assessing Authority's order was upheld on the ground that the petitioner failed to satisfactorily explain or justify these discrepancies.

Key evidence and findings: The record showed that the petitioner's response was accepted only in relation to duty credit scrip discrepancies but rejected concerning the large sum of Rs. 77,88,28,755.17/- reflected in GSTR-9C Column_5O. The petitioner's explanations were found inadequate, and the Assessing Authority's conclusion of evasion was supported by the material on record.

Application of law to facts: The statutory provisions were correctly applied by the Assessing Authority to quantify the evaded turnover and levy tax, penalty, and interest accordingly.

Treatment of competing arguments: The petitioner's contentions challenging the merits of the assessment were considered but the Court declined to reappraise evidence or substitute its own findings, noting that such matters are within the domain of the statutory appellate process.

Conclusion: The Court did not interfere with the merits of the order, leaving the petitioner to challenge such findings through the prescribed appeal mechanism.

3. SIGNIFICANT HOLDINGS

The Court held that:

"Though availability of an alternative remedy is not a complete bar in the exercise of power of judicial review by the High Courts, the recourse to such a remedy would be permissible only if extraordinary and exceptional circumstances are made out."

"When a right is created by a statute, which itself prescribes the remedy or procedure for enforcing the right or liability, resort must be had to that particular statutory remedy before invoking the discretionary remedy under Article 226 of the Constitution of India."

The Court concluded that the petitioner failed to establish any such extraordinary circumstances or jurisdictional infirmities to warrant bypassing the statutory appeal. Consequently, the writ petition was dismissed, leaving the petitioner free to pursue the alternative remedy in accordance with law.

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