M/S Marjina Bibi vs. The State Of Assam And 3 Ors.

Held

The Court held that ordinarily, in revenue matters, a writ petition under Article 226 is not entertained when an adequate and efficacious statutory remedy is available. The High Court does not act as a court of appeal to correct errors of fact or bypass statutory machinery. Therefore, the writ petition was not entertained at this stage. However, considering the petitioner's bank account has been frozen since 05.04.2024, preventing them from making the pre-deposit required under Section 107(6)(b) of the CGST/AGST Act, 2017, the Court provided directions. If the petitioner's bank accounts remain frozen and unoperational, the Appellate Authority shall permit the filing and entertain the appeal without insisting on the pre-deposit, provided the funds in the frozen accounts are equivalent to or more than the required pre-deposit. If not, the petitioner can deposit the shortfall. If the freeze is removed during appeal proceedings, the petitioner must deposit the requisite pre-deposit amount.

Facts

The petitioner, M/s Marjina Bibi, a proprietorship firm, filed a writ petition challenging an Order-in-Original dated 11.09.2024 passed under Section 74 of the CGST/AGST Act, 2017, for the period April 2022 – March 2023, and a Summary of Order in Form GST DRC-07. The petitioner was issued a Demand-cum-Show Cause Notice on 08.04.2024, demanding Rs. 54,00,424/- for alleged erroneous refunds claimed for the period March 2022 to August 2022. The petitioner submitted a reply on 14.05.2024 seeking time to examine records. The impugned order demanded Rs. 1,27,45,000/- as tax, interest, and penalty. The petitioner's bank account was frozen on 05.04.2024.

Key Issues

1. Whether the High Court should entertain a writ petition under Article 226 of the Constitution of India when an alternative statutory remedy of appeal under Section 107 of the CGST/AGST Act, 2017, is available? The petitioner argued that the Adjudicating Authority passed the order without considering their reply and request for time, violating principles of natural justice. The revenue contended that a statutory remedy under Section 107 is available and efficacious, and the petitioner has not made out an exceptional case for writ jurisdiction. The revenue also argued that the petitioner did not revert to the Adjudicating Authority after submitting their initial reply and stated they did not require a personal hearing. 2. Whether the petitioner should be granted relief regarding the pre-deposit requirement for filing an appeal, given their bank account has been frozen? The petitioner argued for similar relief as granted in a co-ordinate bench judgment (WP(C) no. 4694/2024) where an appeal was permitted without pre-deposit due to a frozen bank account. The revenue agreed that similar directions could be made.