M/S Jai Maa Jwalamukhi Iron Scrap Supplier vs. State Of U.P. And 2 Others

Held

The Court held that the writ petition is dismissed on the ground of alternative remedy. The Court noted that the respondents have raised disputed questions of fact. Therefore, the petitioner is relegated to avail the remedy of appeal under Section 107 of the Act. The Court explicitly stated that it was not expressing any opinion on the merits of the petitioner's case. However, considering the writ petition was pending since 2021, the Court directed that if the petitioner files an appeal against the impugned order before the appellate authority under Section 107 of the Act within three weeks from the date of the order, the appeal shall be entertained by the appellate authority in accordance with law, without raising any objection as to the limitation. The issue of the validity of the order on merits was not decided.

Facts

The petitioner, M/s Jai Maa Jwalamukhi Iron Scrap Supplier, filed a writ petition challenging an order dated 15.07.2021 passed by respondent no. 3 under Section 73 of the CGST/UPGST Act, 2017. This order pertained to the tax periods of July 2017 to March 2018 and the year 2019-2020. The respondents, in their counter affidavit, stated that the physical movement of goods could not be verified, and tax deposition was not reflected in the GSTR-2A of the supplier (M/s Star Metal and other Delhi State firms) or GSTR-3B of its predecessor firms. Consequently, the assessing authority concluded that the Input Tax Credit (ITC) availed by the petitioner based on fake invoices from these firms was invalid. The respondents also raised the issue of the petitioner's failure to avail the alternative remedy of appeal under Section 107 of the Act.

Key Issues

1. Whether the writ petition is maintainable despite the availability of an alternative remedy under Section 107 of the CGST/UPGST Act, 2017? 2. Whether the order dated 15.07.2021 passed under Section 73 of the CGST/UPGST Act, 2017, is liable to be quashed on merits? Petitioner's arguments: The petitioner disputed the allegations made by the respondents and implicitly argued for the maintainability of the writ petition, likely on grounds of illegality or procedural impropriety in the impugned order, given the involvement of disputed facts. The petitioner's counsel appeared before the court. Respondent's arguments: The State-respondents argued that the writ petition suffers from the vice of non-invocation of the alternative remedy available under Section 107 of the Act. They contended that the petitioner ought to have filed a first appeal before the appellate authority instead of directly approaching the High Court. They also presented facts supporting the impugned order, stating that ITC availed by the petitioner was invalid due to unverified goods movement and non-deposition of tax by the supplier, citing Section 16 of the GST Act and information pertaining to bogus invoices.