Agarwal Steel PVT LTD vs. The Supdt. Of Central Tax Iii Bally Division Howrah CGST And Central Excise Comm. And Ors

Held

The High Court held that the writ petition should not have been dismissed solely on the ground of availability of an alternate remedy. The Court reasoned that the preliminary ground raised by the appellant, concerning the effect of the earlier order dated 03.07.2018 on the subsequent proceedings, did not involve a complex factual adjudication. Instead, it required the writ court to examine the legal consequence of the prior adjudication on the same set of facts. The Court found that the adjudicating authority ought to have considered the impact of the order passed by the Superintendent of Sales Tax on 03.07.2018, wherein the eligible TRAN-1 Credit was determined. The Court concluded that the writ petition was dismissed without considering these crucial aspects. Therefore, the appeal was allowed, the order of the writ petition was set aside, and the writ petition was restored to its original file for a fresh hearing. The Department was directed to file an affidavit-in-opposition, and coercive action for recovery was stayed. The issue of whether the adjudicating authority applied its mind to the prior order was expressly left to be decided in the fresh hearing of the writ petition.

Facts

Agarwal Steel Private Limited (the appellant) is challenging an adjudication order dated 02.11.2023 passed by the CGST & CX Kolkata North Commissionerate. The appellant had previously accepted an order dated 03.07.2018 from a Superintendent of Sales Tax, which determined their eligible TRAN-1 Credit to be Rs. 99,19,582/- out of Rs. 1,01,16,814/-, and reversed the differential amount of Rs. 1,97,232/-. Subsequently, another Superintendent of Tax issued notices in 2021 and 2022 proposing to verify the transitional credit. A show cause-cum-demand notice dated 01.06.2023 was then issued, proposing to demand the full amount of Rs. 1,01,16,814/-, interest, and penalty. The appellant argued that the same issue had already been adjudicated and that fresh proceedings could not be initiated. The adjudicating authority, in its order dated 02.11.2023, did not address this preliminary objection, stating the appellant failed to submit documents. The writ petition challenging this order was dismissed by the High Court solely on the ground of alternate remedy.

Key Issues

1. Whether the writ petition, which challenged an adjudication order dated 02.11.2023, ought to have been entertained by the writ court despite the availability of an alternate remedy, considering the preliminary ground raised by the appellant regarding a prior adjudication on the same issue. 2. Whether the adjudicating authority, in passing the order dated 02.11.2023, failed to consider the effect of the earlier order dated 03.07.2018, which had already determined the eligible TRAN-1 Credit and directed reversal of the differential amount, thereby constituting a non-application of mind. Contentions of the Appellant: The appellant argued that the adjudication order dated 02.11.2023 was passed without considering the effect of the earlier order dated 03.07.2018, which had already adjudicated the very same issue concerning their TRAN-1 Credit. They contended that since they had accepted the earlier order and reversed the differential amount, fresh proceedings on the same set of facts were impermissible. The appellant submitted that this preliminary objection did not involve a factual adjudication and should have been considered by the writ court. Contentions of the Revenue: The judgment records that the writ petition was dismissed solely on the ground of availability of alternate remedy. No specific arguments from the revenue on the merits of the case or the preliminary objection are recorded.