Mangalam Enterprises vs. The State Of Bihar

Held

The Court held that no grounds were made out for entertaining the writ application under Article 226 of the Constitution of India. The Court noted that the statements made in the counter-affidavit by the respondents had not been controverted by the petitioner. The primary reasoning appears to be the existence of a statutory remedy of appeal, which the petitioner failed to avail. The Court did not delve into the merits of the fraud allegations or the validity of the demand order itself, focusing instead on the procedural aspect of approaching the writ jurisdiction when an alternative remedy is available. The Court implicitly rejected the petitioner's plea for invoking extraordinary writ jurisdiction by emphasizing the availability of statutory appeal. The Court did not expressly leave any issue undecided, but the factual dispute regarding the fraud was not adjudicated upon due to the dismissal on procedural grounds. The operative direction was the dismissal of the writ application.

Facts

The petitioner, Mangalam Enterprises, a registered GST entity in Bihar engaged in the biscuit and bakery business, filed a writ petition seeking to quash an order under Section 74(9) of the Bihar Goods and Services Tax Act, 2017, and Central Goods and Services Act, 2017. This order, issued in FORM GST DRC-07, determined a tax demand of Rs. 1,59,75,348.12/- for the financial year 2023-24. The petitioner claimed to be a victim of online fraud, stating that an individual named Mr. Sampat Kumar obtained his GST credentials under the guise of arranging a bank loan and subsequently used them. The petitioner alleged that input tax credit amounting to Rs. 3,03,43,572.36/- was wrongly availed by five companies using his GST ID in January. He lodged a complaint with the National Cyber Crime Reporting Portal on May 25, 2024, three months after discovering the fraud. The respondents, in their counter-affidavit, highlighted that the petitioner had been filing NIL returns since registration and that all nine business entities registered under his and his family members' names showed no business activity, suggesting fraudulent registration for circular transactions of non-existent input tax credit.

Key Issues

1. Whether the impugned order under Section 74(9) of the Bihar Goods and Services Tax Act, 2017, and Central Goods and Services Act, 2017, is liable to be quashed on the grounds of fraud and misrepresentation by a third party, as contended by the petitioner? 2. Whether the petitioner has an alternative statutory remedy of appeal available, and if so, whether the writ jurisdiction of this Court should be invoked? Petitioner's Arguments: The petitioner argued that he was a victim of online fraud, having been deceived into divulging his GST credentials by Mr. Sampat Kumar, who then facilitated fraudulent input tax credit claims. He sought to quash the demand order and recall all related recovery processes. The petitioner also requested the Court to direct respondent no. 3 to act on his FIR. Respondents' Arguments: The respondents contended that the petitioner's claim of being a victim of fraud was unsubstantiated, pointing to the petitioner's consistent filing of NIL returns and the lack of business activity across multiple entities registered in his and his family's names. They argued that this indicated fraudulent intent for circular transactions of non-existent input tax credit. The respondents further submitted that the petitioner had an adequate remedy of statutory appeal and should not have approached the High Court in its writ jurisdiction.