2025 (11) TMI 357 - HC - GST

Writ not sole remedy; GST State and Central proceedings' common subject matter is a factual issue, appeal allowed

HC held that whether the State and Central GST proceedings involve the same 'subject matter' requires factual inquiry and cannot be finally decided on ... Multiple/duplicate proceedings - Challenge to order passed u/s 74 of the Central GST Act, 2017 read with Section 74 of the UPGST Act, 2017 read with Section 20 of the IGST Act, 2017 - the Adjudicating Authority/respondent no. 3 has only reduced the amount of ITC already reversed by the State GST authority - prior to issuance of show cause notice giving rise to the impugned order the State GST authorities had issued show cause notice and concluded similar proceedings with the same 'subject matter' - HELD THAT:- The fact issues would have to be gone into before any firm conclusion may be drawn if the 'subject matter' of the two sets of proceedings-one initiated by the State GST authorities and the other initiated by the Central GST authorities was one and the same. Prima facie, the Central GST authorities initiated proceedings and have passed the order for an amount different from that which was considered by the State GST authorities. The issue of lack of jurisdiction being pressed by learned counsel for the petitioner is not a pure question of law arising in the facts of the present case. Rather decision on the same would hinge on the fact findings as well. The reference made by learned counsel for the petitioner to the recent decision of the Supreme Court in Armour Security (India) Ltd. Vs. Commissioner CGST [2025 (8) TMI 991 - SUPREME COURT]; the ratio of that decision and the conclusions recorded in paragraph 97 of the report may also remain to be considered by the appeal authority as the said decision is the law laid down by the Supreme Court. However, it does not provide that in all such cases, the writ petition is the only remedy. Considering the fact that the writ petition has remained pending for six months during which the petitioner has lost the period of limitation, subject to the petitioner filing statutory appeal against the impugned order within a period of three weeks from today, the same may be entertained on its own merits without raising any objection as to the limitation. Petition disposed off. ISSUES PRESENTED AND CONSIDERED 1. Whether proceedings and an adjudication order initiated by Central GST authorities under Section 74 CGST (read with Section 20 IGST and corresponding provisions of State law) are barred by prior adjudication by State GST authorities on the same subject matter such that the subsequent Central proceedings lack jurisdiction. 2. Whether the question of jurisdiction (i.e., whether two proceedings concern the same 'subject matter') in the present factual matrix is a pure question of law amenable to writ relief under Article 226 or whether it requires factual investigation. 3. Whether reliance on the Supreme Court decision (referred to in the judgment) compels conferment of writ relief in all cases where overlapping State and Central GST proceedings are instituted, or whether appellate remedies remain available and sufficient. ISSUE-WISE DETAILED ANALYSIS Issue 1 - Jurisdiction of Central GST proceedings where State proceedings exist (legal framework) Legal framework: Sections invoked include Section 74 of the Central GST Act, 2017 and corresponding provisions of the UPGST Act (Sections 73 and 74), read with Section 20 of the IGST Act, 2017; Section 6(2)(b) of the CGST Act, 2017 and the CBEC circular/letter dated 5.10.2018 were identified as relevant to allocation of jurisdiction between Central and State GST authorities and treatment of overlapping proceedings. Precedent Treatment: A recent Supreme Court ruling was placed before the Court; the judgment recognizes that the Supreme Court's ratio is binding and should be considered by the appellate/adjudicating authority, but states that that decision does not mandate that writ relief is the exclusive remedy in all overlapping-proceeding cases. Interpretation and reasoning: The Court examined the record and noted that the Central authority's adjudication prima facie dealt with an amount different from that adjudicated by the State authority and that fact-specific differences (different amounts, potentially different supplies) could mean the 'subject matter' is not identical. The Court found that the adjudicating authority reduced the amount already reversed by the State authority but did not follow Section 6(2)(b) CGST read with the CBEC letter as pressed by the petitioner; nonetheless, the Court refrained from deciding the jurisdictional question on the merits because the determination depends on factual inquiries about the subject matter of the respective proceedings. Ratio vs. Obiter: The Court's holding that jurisdictional objection cannot be decided finally without factual determination is ratio in the context of the petition because it disposes of the petitioner's claim for writ relief. Observations that the adjudicating authority reduced the amount and did not follow Section 6(2)(b)/CBEC guidance are factual findings and guide the analysis but are not elevated to a binding legal rule beyond the case (they are part of the reasoning). Conclusion: The Court concluded that whether the Central proceedings lacked jurisdiction because the State had already adjudicated the same 'subject matter' is not a pure legal question susceptible to immediate writ relief; it depends on fact-finding. Accordingly, no writ interference on this ground was warranted. Issue 2 - Availability of writ remedy versus appellate remedy when jurisdictional overlap is alleged Legal framework: Article 226 extraordinary jurisdiction and the statutory appellate scheme under the GST Acts were the procedural backdrop; the Court considered whether extraordinary writ relief should be exercised when statutory appeal is available. Precedent Treatment: The Court treated the Supreme Court decision as authoritative law to be applied by the appellate authority but held that that decision does not categorically prohibit appellate remedy or convert every overlapping-proceeding dispute into one mandating writ relief. Interpretation and reasoning: The Court emphasized that the petitioner had been heard in the Central proceedings and that the order did not suffer from an evident absence of jurisdiction on its face. Since factual determinations were required and an appeal remedies factual and legal errors, the Court considered the statutory appeal process an appropriate forum for contesting jurisdiction and other grounds. The Court therefore declined to exercise extraordinary writ jurisdiction where appellate remedy is available and appropriate. Ratio vs. Obiter: The determination that appellate proceedings are the appropriate forum for resolving mixed questions of law and fact in this context is part of the Court's operative reasoning and thus functions as ratio governing exercise of writ jurisdiction in similar circumstances. Conclusion: The Court held that the petitioner's remedy is to raise the jurisdictional and other grounds in the statutory appeal; no writ interference was granted. Issue 3 - Impact of binding Supreme Court authority on remedy selection and on duties of the appellate/adjudicating authority Legal framework: Binding effect of Supreme Court decisions on subsequent tribunals and appellate authorities. Precedent Treatment: A recent Supreme Court decision was specifically referred to and its ratio (including paragraph 97 of that report) was acknowledged as binding law which the appellate/adjudicating authority must consider when deciding the appeal. Interpretation and reasoning: The Court stated that while the Supreme Court's decision is binding, it does not automatically convert every overlapping-proceeding case into one where writ relief is the sole remedy. The appellate authority must apply that decision in adjudicating the statutory appeal; the present Court refrained from supplanting the appellate process with writ relief merely because the Supreme Court's decision exists. Thus, the Supreme Court precedent is to be applied by the appellate authority rather than to provide an independent ground for immediate writ interference in every case. Ratio vs. Obiter: The conclusion that the Supreme Court decision informs but does not displace the availability of statutory appeal is ratio as applied to the exercise of extraordinary jurisdiction in this case. Conclusion: The appellate authority is directed to consider the binding Supreme Court ratio while hearing the appeal; however, the existence of that precedent does not justify dismissal of the appeal route or automatic grant of writ relief in all such disputes. Remedial/Practical Directions and Ancillary Findings Interpretation and reasoning: Recognizing delay and loss of limitation period caused by pendency of the writ petition, the Court exercised equitable discretion to permit the appellate authority to admit the statutory appeal despite delay, provided it is filed within three weeks and the appellant cooperates so the appeal may be heard and decided expeditiously. Ratio vs. Obiter: The direction to condone delay specific to the facts and timeline of this case is an operative, case-specific directive (ratio as applied here) rather than a generalized precedent for all cases. Conclusion: The writ petition was dismissed; the petitioner was permitted to file a statutory appeal within a limited period and was afforded protection against limitation objections, with an expectation of expeditious hearing by the appellate authority.