Ks Fibtech Private Limited vs. Additional Director

Held

The Court held that the writ petition was not maintainable. While acknowledging the principles laid down in M/S Radha Krishan Industries regarding exceptions to the alternate remedy rule, the Court found that the facts of the present case did not warrant interference under Article 226. The Court noted that suspicious material was found at the petitioners' premises, indicating their involvement in the clandestine manufacturing and supply of cigarettes, a fact disputed by the petitioners. The Court reasoned that since only a show cause notice had been issued, the petitioners were free to raise all their objections, including the jurisdictional issue and the fact that tax had allegedly been deposited by the main manufacturers in Bihar, before the Competent Authority in their reply to the show cause notice. The Court concluded that disputed questions of fact, such as the petitioners' involvement in manufacturing and the double demand, could not be adjudicated at the show cause notice stage in writ jurisdiction. Therefore, the Court declined to entertain the writ petition, emphasizing the availability of an efficacious alternate remedy.

Facts

The petitioners, KS Fibtech Private Limited and its director Kamal Chand Bothra, filed a Civil Writ Petition challenging a show cause notice dated March 20, 2024, issued under Section 74 of the Central Goods and Services Tax Act. The petitioners contended they were not manufacturers and therefore the notice was wrongly issued to them by Jaipur authorities, as the actual manufacturers were in Bihar and had already deposited the tax. They argued that the issuance of the notice was without jurisdiction. The respondents, including the Directorate General of Goods & Service Tax Intelligence and the Union of India, opposed the petition, asserting that disputed questions of fact were involved and an alternative remedy was available. They also noted that suspicious material was found at the petitioners' premises, suggesting their clandestine involvement in cigarette manufacturing and supply.

Key Issues

1. Whether the show cause notice issued under Section 74 of the Central Goods and Services Tax Act to the petitioners, who claim not to be manufacturers, is without jurisdiction, thereby making a writ petition maintainable? Petitioner's Arguments: The petitioners argued that as they are not manufacturers, the show cause notice under Section 74 of the CGST Act was wrongly issued to them. They asserted that the jurisdiction to issue such a notice did not lie with the Jaipur authorities because the actual manufacturers were located in Bihar and had already deposited the tax. They relied on Supreme Court judgments in M/S Radha Krishan Industries Vs. State of Himachal Pradesh & Ors. and M/S Godrej Sara Lee Ltd. Vs. The Excise And Taxation Officer cum Assessing Authority & Ors., and a Bombay High Court decision in Supermax Personal Care Pvt. Ltd. Vs. Union of India, Commissioner CGST & CEX Audit-Thane. Revenue's Arguments: The revenue contended that the writ petition was not maintainable as the case involved disputed questions of fact, which are not suitable for adjudication in writ jurisdiction. They argued that an alternate remedy was available to the petitioners. They cited Commissioner of Central Excise, Haldia Vs. Krishna Wax Private Limited and a previous decision of the same High Court in M/S. Hero Motocorp Limited Vs. Union of India & Ors.