Jyoti Commotrade PVT. LTD. vs. Assistant Commissioner Of State Tax Salt Lake Charge And Ors

Facts

Jyoti Commotrade Private Limited (the appellant/writ petitioner) filed a writ petition challenging the vires of Section 16(2)(c) of the CGST/WBGST Act and an adjudication order dated April 18, 2023, passed by the Assistant Commissioner of State Tax, Salt Lake Charge. The appellant subsequently withdrew the challenge to the vires of Section 16(2)(c). The adjudication order was based on allegations that the selling dealer had obtained registration by fraud, wilful misstatement, and suppression of facts. The appellant sought to set aside this adjudication order. The High Court noted that the appellant had a statutory appellate remedy available under the Act.

Held

The Court held that the writ petition challenging the adjudication order dated April 18, 2023, was not maintainable. The reasoning was that the appellant had a statutory appellate remedy available under the Act. The Court distinguished the present case from Suncraft Energy (P.) Ltd. by noting that in this case, the allegation was that the selling dealer obtained registration by playing fraud, making wilful misstatement, and suppressing facts. The Court stated that in such exceptional circumstances involving fraud, the appellant should not bypass the appellate remedy. The ratio decidendi is that where allegations of fraud against a selling dealer are made, and a statutory appeal is available, a writ petition is not the appropriate remedy. The Court directed the appellant to file an appeal before the appellate authority within 30 days, subject to making the mandatory pre-deposit. The appellate authority was directed to entertain the appeal, provide a personal hearing, and decide it on merits. The appellant was also granted liberty to seek an interim order regarding the freezing of their electronic credit ledger before the appellate authority. The challenge to the vires of Section 16(2)(c) was dismissed as withdrawn.

Key Issues

1. Whether the writ petition is maintainable for challenging the adjudication order dated April 18, 2023, when a statutory appellate remedy is available under the CGST/WBGST Act, particularly in light of the allegations of fraud against the selling dealer? (Mixed question of law and fact, concerning Section 107 of the CGST Act and principles of writ jurisdiction). Petitioner's arguments: The appellant relied on the decision in Suncraft Energy (P.) Ltd. Vs. Assistant Commissioner, State Tax, which allowed a similar challenge, to argue that the adjudication order should be set aside and the assessing officer directed to proceed against the selling dealer. They contended that they had paid taxes and the selling dealer's registration was valid when the invoice was raised. Revenue's arguments: The State contended that given the allegations of fraud and wilful misstatement by the selling dealer, the appellant should not bypass the statutory appellate remedy. The Court's reasoning highlighted that if the selling dealer obtained registration by fraud, the appellant should avail the appellate mechanism.