2025 (8) TMI 1131 - HC - GST

Writ petition dismissed; assess under Section 107 GST appeal route, Section 74 not attracted; Section 73(1) limitation expired

M/s Adama India Private Limited Versus The State of Madhya Pradesh And Others

M/s Adama India Private Limited Versus The State of Madhya Pradesh And Others - 2025:MPHC - IND:22632 ISSUES PRESENTED AND CONSIDERED 1. Whether a writ under Article 226 is maintainable to challenge an assessment/penalty order passed under Section 74 of the CGST Act when an alternate statutory appeal remedy exists under Section 107. 2. Whether invocation of Section 74 (penalty for fraud/willful misstatement/suppression) is impermissible where the assessing authority has not alleged fraud, willful misstatement or suppression to evade tax and where Section 73 (recovery of tax not paid or short paid, etc.) would otherwise be the provision to be applied but its limitation period has expired. 3. Whether this Court can condone limitation for filing an appeal under Section 107 when a writ petition under Article 226 is used instead and the statutory limitation period for appeal has expired. ISSUE-WISE DETAILED ANALYSIS Issue 1 - Maintainability of writ under Article 226 where statutory appeal exists Legal framework: Constitutional writ jurisdiction under Article 226 is subject to the availability of efficacious alternate statutory remedies; statutory appeal under Section 107 of the CGST Act provides a designated forum for challenging assessment/penalty orders. Precedent Treatment: The Court applied the ratio of the Supreme Court decision holding that High Courts should not entertain writs challenging assessment orders where an alternate remedy of appeal is available; that precedent was followed. Interpretation and reasoning: The Court found that the petitioner's statutory remedies were not exhausted; explanations rejected by the assessing authority should properly be ventilated before the appellate authority and thereafter before the GST Appellate Tribunal (given that presiding officers had been appointed). Judicial prudence requires relegation to the statutory appeal process rather than exercising writ jurisdiction to set aside an assessment/penalty order. Ratio vs. Obiter: Ratio - writ challenging an assessment/penalty order should be dismissed where a specific statutory appeal remedy exists and no exceptional circumstances justifying bypassing the remedy are shown. Observational dicta concerning prudence and general principles of alternative remedies are obiter insofar as they elaborate but do not alter settled law. Conclusions: The writ is not maintainable; petitioner must approach the appellate authority under Section 107 and thereafter the GST Appellate Tribunal. The Court dismissed the writ on this ground and granted liberty to pursue statutory remedies. Issue 2 - Appropriateness of invoking Section 74 versus Section 73 when fraud/willful evasion is not alleged Legal framework: Section 74 imposes penalty where there is fraud, willful misstatement, or suppression of facts with intent to evade tax; Section 73 addresses recovery of tax not paid or short paid, or erroneously refunded or input tax credit wrongly availed, typically subject to a shorter limitation period. Precedent Treatment: The Court did not decide the substantive correctness of invoking Section 74 on facts; instead it treated factual disputes about the nature of the liability and allegations (fraud/willfulness) as matters for the statutory appellate process. No precedent was overruled or distinguished on the legal test for Section 74; the Court deferred factual determination. Interpretation and reasoning: The petitioner's contention that no allegation of fraud or willful evasion was made and that the dispute arose from a rectifiable misclassification (SGST vs IGST) was noted. However, since explanations before the assessing authority were discarded, the proper forum to challenge the factual basis for invoking Section 74 is the appellate authority. The Court declined to entertain the merits in writ jurisdiction where the factual matrix and statutory classification issues remain to be adjudicated in the appeal. Ratio vs. Obiter: Ratio - factual disputes about whether Section 74's threshold (fraud/willful misstatement/suppression) is attracted should be addressed in the appellate process and do not justify bypassing statutory remedies. Observations indicating that misclassification might be rectifiable under Section 77 and therefore not necessarily evidence of willful evasion are obiter guidance relevant to the appellate authority but not binding on merits here. Conclusions: The Court refused to adjudicate whether Section 74 was wrongly invoked; it held that the question is to be examined by the appellate authority and/or GST Appellate Tribunal upon appeal. Issue 3 - Power of High Court to condone limitation for filing appeal when petitioner filed writ outside limitation period Legal framework: The statutory appellate authority has power to condone delay in filing an appeal under the relevant statute; High Court's writ jurisdiction does not extend to condoning statutory limitation periods for appeals when the writ is used to circumvent the appeal route. Precedent Treatment: The Court relied on general principles that limitation for statutory appeals is to be condoned by the appellate authority and not by a writ court; no precedent was altered or distinguished. Interpretation and reasoning: The petitioner sought extension of time before the High Court on the basis that the limitation for appeal had expired. The Court held that because the petitioner invoked writ jurisdiction instead of the appeal remedy and the statutory limitation period is within the competence of the appellate authority to condone, this Court cannot condone that period in a writ petition. The Court further observed that had the writ been filed within limitation, pendency would have been condoned; but because the petition was filed after delay, the prayer for extension was rejected. Ratio vs. Obiter: Ratio - High Court will not condone statutory limitation for filing an appeal when a litigant seeks relief via writ instead of pursuing the statutory route; the power to condone lies with the appellate authority. Observations about hypothetical condonation had the petition been timely are obiter explanations of discretion. Conclusions: The prayer for extension of limitation was rejected; petitioner must seek condonation of delay, if any, before the appellate authority as part of the statutory appeal process. Inter-connected procedural conclusion The Court dismissed the writ petition and directed that the petitioner be relegated to the statutory appellate remedies. The appellate authority and/or GST Appellate Tribunal are to decide appeals on merits in accordance with law, uninfluenced by the observations of this Court. No costs were ordered.