M/S Tata Steel LTD Thro Its Chief Legal Counsel Indirect Taxation Legal (I And L) Mr. Vikash Mittal vs. Union Of INDIA, Thro The Secretary, Ministry Of Finance, Department Of Revenue

Held

The Court held that the impugned Order-In-Original was not wholly without jurisdiction, nor was there a patent breach of the principles of natural justice. Regarding jurisdiction, the Court found that the show-cause notice was issued with the proper officer being satisfied about wrongful availment of ITC due to fraud, willful misstatement, or suppression to evade taxes, and that the conclusion that the conditions for invoking Section 74 co-existed could be tested in appeal. The Court found no patent failure of natural justice, noting that the petitioner was issued a show-cause notice, allowed to respond, and that the impugned order considered the petitioner's contentions. The recall of proceedings from the 'Call Book' was administrative and did not violate natural justice. Therefore, the exceptions for bypassing alternate remedies were not attracted. The Court dismissed the writ petition but granted liberty to the petitioner to file a statutory appeal within four weeks, directing the Appellate Authority to consider it on merits without being influenced by the issue of limitation, as the petitioner had bona fide pursued the writ petition.

Facts

M/s. Tata Steel Limited (the petitioner) filed a writ petition before the Jharkhand High Court challenging an Order-In-Original dated December 26, 2025, passed under Section 74 of the CGST Act, 2017. The petitioner acknowledged the existence of an alternative appellate remedy but argued that the case fell under exceptions to the rule of exhausting such remedies, citing the principles laid down in Whirlpool Corporation v. Registrar of Trade Marks. The petitioner contended that the impugned order was passed without jurisdiction and in violation of natural justice. The Revenue argued that the case was not extraordinary and that the petitioner should avail the statutory appeal mechanism.

Key Issues

1. Whether the writ petition should be entertained bypassing the alternative statutory remedy of appeal, given the petitioner's contention that the impugned Order-In-Original is wholly without jurisdiction under Section 74 of the CGST Act, 2017? 2. Whether the impugned Order-In-Original was passed in violation of the principles of natural justice? Petitioner's arguments: (a) None of the ingredients required for invoking Section 74 of the CGST Act were fulfilled, rendering the exercise of power and the consequent order without jurisdiction. (b) There was a violation of natural justice as the show-cause notice was based on an audit report that the Revenue contested, and jurisdictional contentions were not considered in the impugned order. The petitioner also argued that even on merits, the mismatch in input tax credit (ITC) had been fully explained. Revenue's arguments: (a) This was not an extraordinary case warranting bypassing alternative remedies. (b) There were no jurisdictional errors, and principles of natural justice were complied with. The petitioner's response was considered, and both jurisdictional issues and merits were decided in the impugned order. The Revenue relied on the Bombay High Court's decision in Oberoi Constructions Ltd v. Union of India, which had been followed by the Jharkhand High Court.