M/S Chakardharpur Nagar Parishad Through Its Executive Officer Namely Rahul Yadav vs. Union Of INDIA

Held

The High Court held that the writ petitions were not fit cases to be entertained under its extraordinary jurisdiction, as the petitioners possessed an alternative and efficacious remedy of appeal under Section 107 of the CGST Act, 2017. The Court found that the petitioners' claim of GST demand being "wholly without jurisdiction" did not meet the test laid down in *Whirlpool Corporation* and *Godrej Sara Lee Ltd.*, as adjudicating the jurisdictional issue would involve a serious factual determination regarding the transactions themselves. The Court noted that the Madras High Court decision cited by the petitioners did not establish a blanket exemption for all transactions of local self-government bodies. Therefore, the Court declined to adjudicate the merits of the GST levy, stating that such factual determinations were best suited for the appellate authority. The Court granted liberty to the petitioners to file appeals within four weeks, directing the appellate authority to consider them on merits without being influenced by the issue of limitation, and explicitly left all contentions of the parties open.

Facts

The petitioners, various Municipal Corporations and Nagar Parishads, filed writ petitions challenging orders passed by GST adjudicating authorities. The petitioners contended that the demand for GST on their activities was illegal and without jurisdiction, citing constitutional provisions and Supreme Court judgments. They argued that local self-government bodies are immune from GST. The respondents argued that the petitioners had an alternative and efficacious remedy of appeal under Section 107 of the CGST Act, 2017, and that the blanket exemption claimed by the petitioners was misconceived. The adjudicating authorities had considered factual aspects before confirming the demand, suggesting that only core activities might be exempt, not routine sales of goods or services.

Key Issues

1. Whether the writ petitions are maintainable despite the existence of an alternative and efficacious remedy of appeal under Section 107 of the CGST Act, 2017, given the petitioners' contention that the GST demand is wholly without jurisdiction? (Question of law) 2. Whether Municipal Corporations and other local self-government authorities are immune from GST under the CGST Act, 2017, based on Articles 243W, 243X, and Entry-V in List-2 of Schedule-VII of the Constitution? (Question of mixed law and fact) Petitioner's Arguments: The petitioners argued that the GST demand was patently illegal and without jurisdiction, citing the Supreme Court judgments in *Godrej Sara Lee Ltd. v. Excise and Taxation Officer-cum-Assessing Authority* and *Whirlpool Corporation v. Registrar of Trade Marks, Mumbai*. They contended that when an order is wholly without jurisdiction, the alternative remedy cannot be a bar. They also relied on a Madras High Court decision in *Cuddalore Municipality v. Joint Commissioner of GST and Central Excise* for the proposition that GST cannot be demanded from such bodies, and on constitutional provisions (Articles 243W & 243X) and Schedule VII, List-2, Entry-V, to assert immunity from taxation. Respondents' Arguments: The respondents argued that the petitioners' contention of blanket immunity was misconceived. They submitted that the adjudicating authority had considered factual aspects and concluded that only core activities might be exempt, not routine sales of goods or services. They asserted that there was no constitutional or statutory bar to imposing GST on such transactions and that the petitioners had an appropriate alternative remedy of appeal.