M/S Himalaya Wellness Company vs. UOI And Others

Held

The High Court held that the writ petition is not maintainable. The Court observed that while High Courts have discretion under Article 226, this discretion is restricted when an effective alternate remedy is available. The exceptions to this rule, such as violation of natural justice or lack of jurisdiction, were not established in this case. The Court cited Supreme Court judgments in Radha Krishan Industries vs. State of H.P. and Assistant Commissioner of Sales Tax vs. M/s Commercial Steel Ltd., emphasizing that when a statute prescribes a remedy, that remedy must be exhausted first. The Court found no exceptional situation warranting interference at the show cause notice stage. It noted that the show cause notice itself contained detailed reasons, and entertaining the writ petition would involve delving into the merits of the notice prematurely. The Court explicitly stated it was making no observations on the merits of the case. Consequently, the petition was dismissed, keeping all contentions and defenses open for the appropriate authority.

Facts

M/s Himalaya Wellness Company (the petitioner) filed a writ petition challenging a show cause notice dated May 31, 2024, issued by Respondent No. 3 (Assistant Commissioner, CGST, Audit Committee). The notice proposed a demand of Rs. 4,37,17,830/- along with interest and penalty. The petitioner is engaged in the supply of personal care and pharmaceuticals and had availed Input Tax Credit (ITC) on Goods Transportation Agency (GTA) services. An audit by the Central Tax Department pointed out discrepancies, leading to the issuance of the notice. The petitioner argued the notice was issued with a preconceived mind and in violation of natural justice, making the writ petition maintainable despite an alternate remedy. The respondents contended the petition was premature and not maintainable against a show cause notice.

Key Issues

1. Whether the writ petition is maintainable before the High Court, notwithstanding the availability of an alternate statutory remedy under the CGST Act, 2017, considering the petitioner's contention that the show cause notice was issued with a preconceived mind and in violation of principles of natural justice? Petitioner's Arguments: The petitioner argued that the writ petition is maintainable because the show cause notice was issued with a preconceived mind and in violation of natural justice. They relied on exceptions to the rule of alternate remedy, such as violation of principles of natural justice and proceedings being wholly without jurisdiction. Respondents' Arguments: The respondents strongly urged that the writ petition is not maintainable against a mere show cause notice, which is yet to be adjudicated. They argued that the adjudication process would adhere to principles of natural justice, and therefore, the petitioner should exhaust the statutory remedy available. They contended that the issuance of a show cause notice does not inherently imply a preconceived mind.