2025 (9) TMI 661 - HC - GST

Appeal dismissed for failing to exhaust statutory remedy under Section 107 GST Act; raise all issues in appeal forum

Tvl. DRA. SP. VM. Joint Venture, Rep. by its Partner Mr. V. Manoharan Versus The State Tax Officer, Ramanathapuram.

The HC dismissed the appeal, upholding the Single Judge's dismissal of writ petitions challenging an assessment order and subsequent suo motu ... Maintainability of petition - relegation to approach the appellate authority under Section 107 of the GST Act, 2017 - pursuant to the assessment order, suo motu rectification proceedings were initiated and the authority disposed of the same, without affording reasonable opportunities to the appellant - violation of principles of natural justice - HELD THAT:- In respect of the returns filed by the appellant, assessment proceedings were initiated and the notice dated 22.05.2024, 10.06.2024 and 19.06.2024 were issued for personal hearing of the appellant. Pursuant to the notices issued, the appellant was heard and thereafter, the respondent herein had issued the assessment order dated 23.07.2024. Subsequently, suo motu rectification proceedings came to be initiated, wherein, additionally penalty came to be imposed. Challenging both the assessment order and the rectification order, the appellant had preferred the Writ Petition. Admittedly, as against the assessment order passed, there is a statutory appeal provided under Section 107 of TNGST, Act. While the appellant is having an efficacious alternative remedy open under section 107 of the GST Act, the present writ petitions instituted by the appellant as against the assessment order and the suo motu rectification proceedings in the writ petition without exhausting the appellate remedy is not maintainable. When there is a statutory appeal remedy provided under the Act, all the issues can be raised before the statutory authority including the legal issues raised herein and the authorities while considering the appeal will deal with all the issues that are raised in the appeal. Since the Writ Court had given liberty to the appellant to invoke the Appellate Authority under Section 107 of the GST Act, the relief sought for in the writ appeals cannot be entertained - the learned Single Judge had rightly by noticing the provisions and also finding that there is a statutory appeal remedy available for the appellant dismissed the writ petitions - there are no infirmity in the orders passed by the Writ Court. Appeal dismissed. 1. ISSUES PRESENTED AND CONSIDERED 1. Whether writ jurisdiction under Article 226 of the Constitution is maintainable to challenge an assessment order and a subsequent suo motu rectification order (including imposition of penalty) under the GST enactment where a statutory appeal remedy is available under Section 107 of the GST Act. 2. Whether initiation and disposal of suo motu rectification proceedings without affording opportunities to the assessee constitutes such a breach of principles of natural justice as to justify bypassing the statutory appellate remedy and maintainance of a writ petition. 3. Whether the rule of exhaustion of alternative statutory remedies applies with greater rigour in taxation/recovery matters and whether recognized exceptions to that rule are attracted on the facts. 2. ISSUE-WISE DETAILED ANALYSIS Issue 1 - Maintainability of writs where Section 107 statutory appeal exists Legal framework: The GST enactment provides a statutory appellate remedy under Section 107. Article 226 confers inherent writ jurisdiction on High Courts. Precedent Treatment: The Court followed Supreme Court pronouncements emphasizing that High Courts should ordinarily not entertain writ petitions under Article 226 when efficacious statutory remedies exist, particularly in matters of tax or public dues (as reiterated in recent authoritative decisions cited by the Court). Interpretation and reasoning: The Court held that where a specific statutory appeal mechanism exists and is efficacious to address all legal and factual issues arising from an assessment (including challenges to assessment and rectification orders), the petitioner must first exhaust that remedy. The Court noted that statutory appellate authorities can consider all issues raised and provide complete redress, and that invoking writ jurisdiction to avoid statutory obligations (such as deposit/conditions in appeal) is impermissible. Ratio vs. Obiter: Ratio - High Courts should decline to exercise Article 226 jurisdiction to entertain challenges to assessment and rectification orders under the GST Act when an efficacious appeal under Section 107 is available. Obiter - observations on policy reasons underlying the rule (e.g., protection of revenue and comprehensive statutory scheme) serve as supporting dicta. Conclusions: Writ petitions challenging the assessment order and the rectification order were not maintainable because an effective alternative remedy under Section 107 was available and the petitioner had not exhausted it; the Writ Court correctly relegated the petitioner to the statutory appellate forum. Issue 2 - Alleged denial of opportunity in suo motu rectification proceedings and exception to exhaustion rule Legal framework: Principles of natural justice (audi alteram partem) apply to quasi-judicial/statutory proceedings; exceptions to the exhaustion rule arise where the statutory authority acts in total violation of the enactment, in defiance of fundamental judicial procedure, or where there is a total breach of principles of natural justice. Precedent Treatment: The Court relied on established authorities recognizing limited exceptions permitting writ relief where statutory remedy is ineffective because of violation of natural justice or where the statutory forum is non-existent or functus officio. The Court cited and followed recent Supreme Court exposition that exceptions are narrow and must be clearly established. Interpretation and reasoning: On facts, the Court found that notices for personal hearing were issued on multiple dates and the appellant was heard before the assessment order; the subsequent suo motu rectification proceedings that imposed penalty did not, on the record, demonstrate a total denial of opportunity sufficient to displace the rule of exhaustion. The Court concluded that the statutory appeal forum is capable of adjudicating alleged procedural lapses and of granting appropriate relief; hence the narrow exceptions were not triggered. Ratio vs. Obiter: Ratio - Alleged procedural infirmities in rectification proceedings do not automatically justify bypassing the statutory appeal unless the breach constitutes a total violation of natural justice or statutory procedure; such a finding must be clearly supported by the record. Obiter - general commentary on the limits of judicial intervention where appellate remedies exist. Conclusions: The facts did not establish a total violation of natural justice in the rectification proceedings that would justify entertaining a writ petition without exhausting Section 107 remedies; therefore the exception to the exhaustion rule was not attracted. Issue 3 - Application of the rule of exhaustion in taxation/recovery matters and effect of prior authority Legal framework: High Courts exercise self-restraint by refusing to entertain Article 226 petitions where the statute provides a comprehensive redressal mechanism; this principle is applied with particular rigour in tax and public-revenue contexts. Precedent Treatment: The Court explicitly followed Supreme Court authorities establishing that writ jurisdiction should not ordinarily be exercised when statutory remedies are available, and recognized that the rule of exhaustion is discretionary but must be applied with caution in revenue matters. Interpretation and reasoning: The Court emphasized the need to protect the statutory scheme and the rights of revenue authorities to recover dues without undue judicial intervention at the first instance. The Court observed that encouraging litigants to approach High Court to avoid statutorily mandated deposits or procedural requirements would undermine the legislative remedial structure. Ratio vs. Obiter: Ratio - The exhaustion doctrine applies with force in taxation matters; High Courts should ordinarily require invocation of statutory appeal forums before exercising writ jurisdiction. Obiter - normative remarks about judicial restraint and systemic implications of bypassing statutory remedies. Conclusions: The principle of exhaustion of alternative remedies was applied, and the writ petitions were dismissed as premature and not maintainable when statutory appellate remedy under Section 107 remained available. Cross-references and operative conclusion Cross-reference: Issues 1-3 are interrelated: the availability of Section 107 (Issue 1) is dispositive unless an exception based on a total violation of natural justice (Issue 2) is established; Issue 3 supplies the overarching principle guiding the Court's exercise of discretion. On the record, none of the exceptions applied, and the Court followed controlling precedent to dismiss the writs and direct recourse to the statutory appellate mechanism.