2025 (9) TMI 666 - HC - GST

Petitioner must challenge GST assessment with interest and penalty before appellate forum; assessment remains operative until set aside

M/s Shree Dev Builders And Construction Pvt. Ltd. Thru. Director Mr. Gaurav Singh Versus State Of U.P. Thru. Addl. Chief Secy. /Prin. Secy. Rural Engineering Deptt. And 10 Others

The HC held that the petitioner aggrieved by the assessment order requiring payment of GST with interest and penalty must pursue remedies before the ... Prayer of representation to be decided by the Government - withdrawal of demand of tax without insisting on recovery of interest and penalty imposed by the Assessment Order dated 08.01.2025 - HELD THAT:- If the petitioner is aggrieved by the order dated 08.01.2025 asking him to pay GST with interest and penalty for non-payment, the remedy available to the petitioner, as has been directed by this Court in its order dated 22.04.2025, is to approach the Appellate Forum. The State Government is not going to decide the representation of the petitioner and direct the respondents to act against the provisions of law insofar as the order of Assessment dated 08.01.2025 has not been set aside by any competent Forum till date. Petition disposed off. ISSUES PRESENTED AND CONSIDERED 1. Whether a writ in the nature of mandamus should issue directing executive respondents to consider the petitioner's representation and to impose Goods and Services Tax (GST) at 12% and discharge the tax and interest liability assessed by an assessment order. 2. Whether a writ in the nature of mandamus should issue directing revenue authorities to permit the petitioner to pay assessed tax without insisting on recovery of interest and penalty imposed by the assessment order. 3. Whether the Court should restrain or direct revenue authorities not to take coercive action for recovery of the assessed dues until the executive considers the petitioner's representation seeking relief from tax, interest and penalty. ISSUE-WISE DETAILED ANALYSIS Issue 1 - Mandamus to direct executive respondents to consider representation and alter GST liability (including rate and interest) Legal framework: The appropriate legal remedies against an assessment order under the GST statutory scheme include appellate fora as prescribed by the GST law; executive or departmental action must conform to statutory provisions and cannot be directed to act contrary to law. Precedent treatment: The Court adheres to the principle that writ relief in tax matters ought not to supplant the statutory appellate remedy where such remedy is available and effective; prior judicial observations emphasize the availability of appeal under the GST statute as the proper channel to challenge assessment orders. Interpretation and reasoning: The Court examined the petitioner's request for mandamus to compel executive respondents to decide a representation and to effectuate payment of tax/interest on terms favorable to the petitioner. The Court found that where a statutory assessment order stands unchallenged before the competent appellate forum, it is not open to the Court to direct executive authorities to disregard or vary the statutory consequences of that order. The executive is not empowered to set aside or override an assessment order by administrative fiat when the law provides a judicial/statutory appellate remedy. Ratio vs. Obiter: Ratio - A mandamus cannot be issued to compel executive respondents to act contrary to or in substitution for the statutory appellate mechanism in respect of a tax assessment; the availability of the prescribed appeal remedies precludes issuance of such extraordinary writ for the relief sought. Conclusion: The petitioner must pursue the remedy of appeal before the competent appellate forum; mandamus to direct executive respondents to consider the representation in the manner sought (including altering the tax rate or interest liability) is not appropriate and is refused. Issue 2 - Mandamus to permit payment of tax without recovery of interest and penalty Legal framework: The GST statutory scheme prescribes liabilities for tax, interest (including statutory interest under Section 50 as referenced), and penalties; the revenue's power to demand payment, including interest and penalty, flows from statutory assessment orders and is subject to challenge by appeal or other statutory remedies. Precedent treatment: Administrative indulgence to waive statutory interest/penalty cannot be directed by the Court where the obligation arises under a valid assessment and the statute provides the mechanism for contesting those liabilities; courts have declined to exercise writ jurisdiction to achieve what the statute entrusts to appellate/adjudicatory mechanisms. Interpretation and reasoning: The petitioner's request to be permitted to pay only the tax component while obtaining waiver of interest and penalty from revenue authorities was considered. The Court noted that the assessment order remains operative unless and until set aside by the competent forum; consequently, revenue cannot be directed to accept payment in a manner inconsistent with the assessment or to forego statutorily imposed interest/penalty absent exercise of powers in accordance with law. The proper avenue to seek remission or adjustment of interest/penalty is an appeal or such statutory remedy as may be available; the Court will not grant mandamus to compel revenue to waive statutory consequences. Ratio vs. Obiter: Ratio - The Court will not issue mandamus to compel revenue authorities to accept payment of assessed tax on terms that omit statutorily payable interest/penalty where the assessment order stands unchallenged before the competent forum; the petitioner's remedy lies in pursuing statutory appellate/other prescribed remedies. Conclusion: Mandamus to permit payment of tax without recovery of interest and penalty is denied; petitioner must pursue available statutory remedies (appeal) to contest or seek remission of interest/penalty. Issue 3 - Interim protection against coercive recovery pending administrative decision on representation Legal framework: Orders for interim relief, including prohibiting coercive recovery, are discretionary and are generally granted only where the Court is satisfied that the petitioner would suffer irreparable or unconscionable hardship and where such interim direction does not conflict with the statutory scheme or prejudice public revenue; where a statutory appeal is available and not exhausted, courts are cautious in interfering with revenue recovery. Precedent treatment: Courts have repeatedly held that coercive action may be stayed only on proper application and typically when appeal procedures are invoked or where statutory provisions permit suspension; absent such steps, mandatory protection from coercive measures is not lightly granted. Interpretation and reasoning: The petitioner sought a direction restraining coercive recovery until the executive considers the representation. The Court reasoned that since the assessment order has not been set aside and the statutory appellate remedy is available, it would not grant a directive preventing recovery absent pursuit of those remedies. The executive cannot be directed to withhold lawful recovery measures merely on the basis of an administrative representation that seeks relief inconsistent with the assessment order and statutory law. Ratio vs. Obiter: Ratio - The Court will not restrain coercive recovery by issuing mandamus where the petitioner has not availed the prescribed appellate remedy and the assessment remains operative; interim protection must be sought and justified before the competent forum. Conclusion: No direction restraining coercive action was issued; the petitioner is required to approach the appellate forum, and the Court declined to grant interim protection predicated solely on an unadjudicated representation to executive authorities. Cross-references and operative outcome The issues are interrelated: the refusal to issue mandamus to alter tax/interest/penalty flows from the foundational conclusion that the statutory appellate remedy must be pursued; accordingly, neither administrative reconsideration compelled by mandamus nor judicially directed waiver of statutory interest/penalty or protection from recovery was granted. The appropriate course directed is invocation of the prescribed appellate remedy before the competent forum.