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. The petitioner also 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 directed the petitioner to reverse Input Tax Credit (ITC) availed, raising a demand of Rs. 65,158.10 towards tax, interest, and penalty. The petitioner argued that the order was passed without proper application of mind and failed to consider their explanation regarding the rightful availment of ITC, supported by documentation.

Held

The Court did not enter into the merits of the contentions of the parties. The petitioner, through their counsel, sought permission to withdraw the writ petition with liberty to avail the alternative remedy of appeal. The Court granted this request. Therefore, the Court did not decide the substantive issues raised by the petitioner regarding the pre-judging of the case by the show cause notice or the lack of application of mind in the ex-parte order. The Court's decision was solely based on the petitioner's request to withdraw the petition to pursue the statutory appeal. The principle that can be cited from this judgment is that High Courts may permit withdrawal of writ petitions to allow assessees to pursue alternative statutory remedies, especially when the Court has not delved into the merits of the case. The operative direction was to dismiss the writ petition as withdrawn, making it clear that the petitioner is at liberty to avail the alternative remedy of appeal as permissible in law.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, pre-judged and pre-decided the entire issue, thus vitiating the subsequent proceedings? (Question of law) 2. Whether the ex-parte order dated 28.09.2020, passed under Section 73(9) of the Jharkhand GST Act, is liable to be quashed for being passed without proper application of mind and without considering the petitioner's explanation regarding the availment of Input Tax Credit (ITC)? (Question of mixed law and fact) Petitioner's contentions: The petitioner argued that the impugned order was passed without proper application of mind and did not contain reasons for rejecting their explanation for rightful ITC availment, which was supported by invoices, GST returns, and proof of the supplier's registration. They contended that the writ petition was maintainable and the order should be quashed and remanded. Respondents' contentions: The respondents argued that the ITC availed by the petitioner against goods from a non-existent dealer was disallowed under Section 16(2)(c) of the JGST Act, 2017. They asserted that the Assessing Authority passed a reasoned order after proper application of mind. Crucially, the respondents raised a plea of alternative remedy under Section 107 of the JGST Act, 2017, relying 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 alternative remedies exist, except in cases of breach of fundamental rights, violation of natural justice, excess of jurisdiction, or challenge to the vires of a statute.