Ms Jalandhar Steel Through Its Proprietor Gopal Vishwa Karma vs. The State Of Jharkhand

Facts

The petitioner, M/s Jalandhar Steel, through its proprietor Gopal Vishwakarma, filed a writ petition challenging a show cause notice dated July 31, 2020, issued under Section 73(1) and Rule 142(1) of the GST Act by the State Tax Officer, Bokaro Circle. The petitioner contended that the notice pre-judged the issue and pre-decided the liability for tax, interest, and penalty. Furthermore, the petitioner challenged an ex-parte order dated September 28, 2020, passed by the Assistant Commissioner of State Taxes, Bokaro Circle, under Section 73(9) of the Jharkhand GST Act, along with a consequential demand notice (DRC-07). This order disallowed Input Tax Credit (ITC) and raised a demand of Rs. 3,56,527.56 towards tax, interest, and penalty.

Held

The Court noted that the petitioner sought to quash the show cause notice and the ex-parte order, primarily on the grounds of pre-judgment and lack of proper application of mind. The respondents, in their counter-affidavit, argued that the ITC was disallowed due to the petitioner receiving goods from a non-existent dealer, citing Section 16(2)(c) of the JGST Act. They also strongly contended that an alternative remedy of appeal under Section 107 of the JGST Act was available to the petitioner. The respondents relied on the Supreme Court's decision in Assistant Commissioner of State Tax and others Vrs. Commercial Steel Limited, emphasizing that writ petitions are typically dismissed when an effective alternative remedy exists, unless specific exceptional circumstances like violation of natural justice or excess of jurisdiction are present. Faced with the availability of the statutory appeal remedy and the respondents' reliance on the Apex Court's precedent, the learned counsel for the petitioner sought permission to withdraw the writ petition to avail the alternative appellate remedy. Consequently, the High Court dismissed the writ petition as withdrawn, making it clear that it had not entered into the merits of the contentions raised by either party. The petitioner was granted liberty to pursue the alternative remedy of appeal as permissible in law.

Key Issues

1. Whether the show cause notice dated 31.07.2020, issued under Section 73(1) and Rule 142(1) of the GST Act, is liable to be quashed for pre-judging the issue and pre-deciding the liability of the petitioner for tax, interest, and penalty. 2. Whether the ex-parte order dated 28.09.2020, passed under Section 73(9) of the Jharkhand GST Act, and the consequential demand notice are liable to be quashed for being passed without proper application of mind and without considering the petitioner's explanation regarding the rightful availment of Input Tax Credit. Petitioner's arguments: The petitioner argued that the impugned order was passed without proper application of mind and lacked reasons for rejecting their explanation for the rightful availment of ITC, which was supported by documents like invoices and GST returns. They also highlighted the existence of registration for the supplier, M/s Sri Sai Enterprises, until its cancellation. The petitioner sought to quash the orders and have the matter remanded for reconsideration. Respondents' arguments: The respondents contended that the ITC availed by the petitioner was disallowed because the goods were received from a non-existent dealer, in contravention of Section 16(2)(c) of the JGST Act, 2017. They asserted that the Assessing Authority passed a reasoned order after applying its mind. Crucially, the respondents raised a plea of alternative remedy under Section 107 of the JGST Act, 2017, and relied on the Supreme Court judgment in Assistant Commissioner of State Tax and others Vrs. Commercial Steel Limited, which held that writ petitions are generally not maintainable when an alternative remedy exists, except in cases of breach of fundamental rights, violation of natural justice, excess of jurisdiction, or challenge to the vires of a statute.