M/S N.H. Lubricants vs. State Of Rajasthan

Held

The Court held that the present case involves a factual dispute regarding whether the supplier firm was fake or bogus, and thus does not raise any jurisdictional issue or violation of the principles of natural justice. Consequently, the Court found the case distinguishable from those cited by the petitioner, which were entertained despite the availability of alternative remedies. The Court explicitly stated that it would not comment on the sufficiency of the material concerning the alleged fake/bogus supplier firm. Therefore, the writ petition was dismissed, directing the petitioner to avail the alternative remedy. However, considering the petition was filed before the expiry of the limitation period, the Court granted liberty to file an appeal within three months, with a direction that the Appellate Authority should decide the appeal on its merits without considering the delay.

Facts

The petitioner, M/s N.H. Lubricants, filed a writ petition before the Rajasthan High Court challenging an order that reversed their input tax credit. The petitioner argued that the authorities should first attempt to recover tax from the supplier before proceeding against the buyer, citing a press release and previous High Court judgments (M/s Apar Fragrances vs. Union of India, Rajasthan High Court, and a Calcutta High Court case). The respondents contended that the present case was distinguishable as the reversal was based on the factual premise that the transactions were with a bogus/fake firm solely to claim input tax credit, supported by an investigation report and the impugned order. The High Court noted that the case involved a factual dispute, not a jurisdictional issue or violation of natural justice.

Key Issues

1. Whether the Court should entertain a writ petition despite the existence of an alternative remedy, when the petitioner alleges improper consideration of their reply and seeks to invoke the extraordinary jurisdiction of the Court? 2. Whether the authorities are required, as per a press release and judicial precedents, to first pursue recovery from the supplier before proceeding against the buyer for reversal of input tax credit, especially when the supplier is not missing, has not closed business, or has adequate assets? Petitioner's Arguments: The petitioner argued that the authorities failed to properly consider their reply. They contended that a press release mandates recovery from the supplier first, unless exceptional circumstances like the supplier being missing or having no assets exist. They relied on the Rajasthan High Court's decision in M/s Apar Fragrances vs. Union of India and a Calcutta High Court order, which were entertained despite alternative remedies. Respondents' Arguments: The respondents argued that the cited cases were factually distinguishable. They asserted that the impugned order was based on the factual premise that the transactions were with a bogus/fake firm to fraudulently claim input tax credit, as supported by the investigation wing's report and the impugned order.