Ms Satyam Enterprises Through Its One The Partner Sri Prakash Kumar Vishwakarma vs. The State Of Jharkhand

Facts

The petitioner, M/s Satyam Enterprises, challenged a show cause notice dated July 31, 2020, issued under Section 73(1) and Rule 142(1) of the GST Act, and an ex-parte order dated September 28, 2020, passed by the Assistant Commissioner of State Taxes, Bokaro Circle. The order disallowed Input Tax Credit (ITC) and raised a demand of tax, interest, and penalty totaling Rs. 19,80,850.70. The petitioner argued that the show cause notice pre-judged the issue and the final order lacked reasoning for rejecting their explanation regarding the rightful availment of ITC, supported by invoices and GST returns, and the supplier's registration status. The respondents contended that the ITC was disallowed due to Section 16(2)(c) of the JGST Act, as the goods were received from a non-existent dealer, and that an alternative remedy of appeal under Section 107 of the JGST Act was available.

Held

The Court did not enter into the merits of the contentions of the parties. The petitioner, in view of the respondents' submission regarding the availability of an alternative remedy of appeal, sought permission to withdraw the writ petition with liberty to avail that remedy. Consequently, the writ petition was dismissed as withdrawn. The Court clarified that it was open for the petitioner to avail the alternative remedy of appeal as permissible in law. The Court explicitly stated that it had not examined the validity of the show cause notice or the ex-parte order on their merits, nor had it decided on the issues of pre-judging the case or lack of reasons in the order. The principle that can be cited is that High Courts may dismiss writ petitions as withdrawn when petitioners opt to pursue alternative statutory remedies, especially when the availability of such remedies is pointed out by the respondents and the Court has not delved into the substantive issues.

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 JGST Act, is liable to be quashed for being passed without proper application of mind and lacking reasons for rejecting the petitioner's explanation regarding the rightful availment of Input Tax Credit? Petitioner's arguments: The petitioner contended that the impugned order was passed without proper application of mind and failed to provide reasons for rejecting their reply and explanation concerning the rightful availment of Input Tax Credit, which was supported by documentation and the supplier's registration. They argued for the maintainability of the writ petition and for the matter to be remanded. Respondents' arguments: The respondents argued that the ITC was disallowed under Section 16(2)(c) of the JGST Act because the petitioner availed credit against goods from a non-existent dealer. They asserted that the Assessing Authority passed a reasoned order after proper application of mind. Crucially, they raised a plea of the availability of an alternative remedy of appeal under Section 107 of the JGST Act, relying on the Supreme Court judgment in Assistant Commissioner of State Tax and others Vrs. Commercial Steel Limited, which stated that writ petitions are generally not maintainable when such remedies exist, unless exceptional circumstances like breach of fundamental rights or violation of natural justice are present.