2025 (9) TMI 1212 - HC - GST

Petition dismissed for failure to exhaust alternative remedies; bald jurisdiction and natural justice claims not exceptional

The HC dismissed the petition for failure to exhaust available alternative remedies, finding petitioners' allegations of lack of jurisdiction and breach ... Maintainability of petition - availability of alternative remedy - jurisdiction of officer issuing SCN - HELD THAT:- In this Court, there are several Petitions, where the Petitioners insist upon bypassing the practice of exhaustion of alternate remedies by making bald allegations about proceedings being wholly without jurisdiction or a breach of natural justice. Though these are the well-known exceptions in the context of exhaustion of alternate remedies, the deviation from this practice is permitted upon the Petitioners making out an exceptional case which admits of no serious factual disputes. Such deviation cannot be permitted based upon vague pleadings or by relying upon observations dehors the context in which the same are made. This is clearly one such case. The Petitioner has attempted to take a chance to see if some interim relief could be wriggled out, and the show-cause proceedings stalled or delayed. In the case of Oberoi Constructions Limited V/s. Union of India And Ors. [2024 (11) TMI 588 - BOMBAY HIGH COURT] several decisions of this Court and the Hon’ble Supreme Court are referred, on the issue of exhaustion of alternate remedies. By following the reasoning in the said decision and the decisions relied upon therein, it is declined to entertain this Petition. The petition is dismissed. ISSUES PRESENTED AND CONSIDERED 1. Whether a writ petition is maintainable challenging a show cause notice on the ground that the issuing officer lacks jurisdiction, where the petitioner has not exhausted alternate remedies and factual disputes exist. 2. Whether an observation in a higher court's decision, that 'the officer dealing with the supplier would have jurisdiction', when relied upon out of context, can establish ex facie lack of jurisdiction to warrant immediate judicial intervention. 3. Whether the High Court should depart from the practice of requiring exhaustion of alternate remedies in tax/administrative proceedings and entertain pre-emptive relief where the pleadings are vague and no exceptional circumstances are made out. 4. Whether costs may be imposed to deter the filing of writ petitions that attempt to delay or stall administrative proceedings by taking speculative or tactical 'chances'. ISSUE-WISE DETAILED ANALYSIS Issue 1 - Maintainability of writ petition challenging show cause notice when alternate remedies exist Legal framework: The settled principle requires exhaustion of alternate statutory or quasi-judicial remedies before invoking extraordinary writ jurisdiction, except in cases of jurisdictional error, breach of natural justice, or other extraordinary circumstances that admit no factual dispute. Precedent Treatment: Reliance is placed on prior decisions of the High Court and the Supreme Court reiterating the exhaustion rule; those authorities were followed (not overruled) to decline writ intervention in the absence of exceptional, undisputed facts. Interpretation and reasoning: The Court held that the petition does not disclose exceptional circumstances; pleadings are vague and insufficient to demonstrate a clear ex facie lack of jurisdiction or a breach of natural justice. The proper course is to raise objections and defences in response to the show cause notice and, if necessary, pursue statutory remedies thereafter. Allowing pre-emptive writ relief on such pleadings would encourage circumventing established remedial channels and burden court dockets. Ratio vs. Obiter: Ratio - Where factual disputes exist and no exceptional circumstances are made out, writ jurisdiction should not be exercised to quash or stay show cause proceedings; the petitioner must exhaust alternate remedies. Obiter - General comments on docket pressures and litigational tendencies to take 'chances' are ancillary. Conclusion: Writ petition dismissed for failure to establish a clear, undisputed jurisdictional error or other exceptional circumstance; petitioner must first pursue available remedies in the administrative/tribunal regime. Issue 2 - Proper contextual use of precedent stating 'officer dealing with the supplier would have jurisdiction' Legal framework: Precedential pronouncements must be read in context; isolated phrases cannot be extracted to defeat statutory jurisdictional schemes absent a full contextual reading and application to the facts. Precedent Treatment: A particular sentence from a higher court's decision was relied upon by the petitioner. The Court treated the sentence as being 'torn out of context' and therefore inadequate to establish lack of jurisdiction in the instant facts. Interpretation and reasoning: The Court examined the reliance on that sentence and concluded it does not, by itself, confer an automatic right to dismiss or quash the impugned notice issued by an officer having prima facie jurisdiction. The petitioner may raise that argument before the authority in the show cause proceedings; a writ based solely on an out-of-context textual fragment is not justified. Ratio vs. Obiter: Ratio - Fragmentary reliance on precedent without contextual application does not suffice to show jurisdictional defect for immediate writ relief. Obiter - Emphasis on proper reading of precedents to avoid misuse. Conclusion: The petitioner's reliance on the isolated sentence failed to demonstrate a jurisdictional bar to the proceedings; the argument must be ventilated before the statutory authority as part of the administrative process. Issue 3 - Exceptional circumstances standard and burden on petitioners seeking to bypass alternate remedies Legal framework: Exceptional circumstances permitting departure from exhaustion requirement include clear jurisdictional error, absence of alternative efficacious remedies, or a violation of natural justice that cannot be remedied later; the petitioner bears the burden to plead facts showing no serious factual disputes and that immediate relief is necessary. Precedent Treatment: The Court applied its earlier reasoning (cited decision) and other authorities emphasizing that exceptions to the exhaustion rule are narrowly confined and cannot be invoked on vague or speculative pleadings. Interpretation and reasoning: The Court found that the petition was an attempt to obtain interim advantage and delay the show cause process without a supporting factual foundation. The absence of detailed pleadings and the existence of factual disputes weigh against finding the requisite exceptional circumstances. The Court reaffirmed that deviation from the exhaustion principle is permissible only when the petition establishes an exceptional case admitting no serious factual dispute. Ratio vs. Obiter: Ratio - The exceptional-circumstances exception will not be applied where pleadings are vague and factual disputes exist; the petitioner must demonstrate immediacy and absence of alternative efficacious remedies. Obiter - Observations criticizing tactical litigation seeking to exploit docket pressures. Conclusion: No exceptional circumstances established; the petition was rightly declined for non-entertainment and the petitioner must proceed through statutory remedies. Issue 4 - Imposition of costs to deter frivolous or tactical writ petitions Legal framework: Courts possess inherent and statutory powers to award costs to deter frivolous litigation and to compensate for misuse of judicial time and resources; costs may be directed to public institutions when appropriate to serve a deterrent purpose. Precedent Treatment: The Court relied upon its supervisory powers and prior practice to impose costs as a means to discourage attempts to obtain interim relief by filing speculative writ petitions. Interpretation and reasoning: To 'contain the flood' of similar petitions and discourage litigants from taking speculative chances that delay administrative processes, the Court imposed quantified costs payable to a public hospital and required a compliance return. This sanction was imposed because the petition was an attempt to stall proceedings without demonstrating compelling reasons for writ intervention. Ratio vs. Obiter: Ratio - Where a petition is an attempt to delay administrative proceedings without adequate grounds, costs may be imposed as a deterrent and to compensate public interest. Obiter - Remarks about docket pressures and wider policy considerations are illustrative but ancillary. Conclusion: Petition dismissed with costs of Rs. 25,000 payable to a public hospital within a stipulated time and a compliance report directed; such costs serve both deterrent and compensatory functions. Cross-references See Issue 1 and Issue 3 - both address the exhaustion rule and exceptional circumstances standard; the Court's reasoning on maintainability (Issue 1) is grounded in the exceptional-circumstances analysis (Issue 3). Final disposition (limited to conclusions on the issues) The Court dismissed the writ petition for lack of exceptional circumstances and because the petitioner failed to demonstrate a clear ex facie lack of jurisdiction; reliance on an out-of-context sentence from higher authority was rejected; costs were imposed to deter tactical litigation, and all substantive defenses are preserved for adjudication in response to the show cause notice.