Earayee Agencies vs. State Tax Officer (Inspection)- Iii

Facts

The petitioner, Earayee Agencies, a registered taxpayer and authorized dealer of ITC Limited, filed multiple writ petitions before the Madurai Bench of the Madras High Court. These petitions challenged show cause notices issued by the respondent, the State Tax Officer (Inspection-III), following a surprise inspection in January 2024. The respondent alleged discrepancies in the petitioner's returns and demanded payment of tax, interest, and penalty. The petitioner sought quashing of the assessment order dated 19.09.2024 (Form GST DRC-05) and the refund of Rs. 2,89,800/- in penalty recovered during the inspection. The petitions also sought consequential directions for the refund of the recovered penalty.

Held

The Court held that the petitioner has an effective alternative remedy by way of an appeal before the Appellate Authority under Section 107 of the TNGST Act, 2017. The Court noted the submission of the learned Government Advocate regarding the availability of this statutory remedy. Consequently, the Court did not delve into the merits of the petitioner's challenge to the assessment order or the penalty recovery. The Court's decision was based on the principle that statutory remedies must be exhausted before approaching the High Court under Article 226, unless there are exceptional circumstances not pleaded or established here. The Court disposed of the writ petitions with liberty to the petitioner to approach the appellate authority. The appellate authority was directed to entertain the appeal if filed within two weeks from the receipt of the order and dispose of it within two months thereafter. No order as to costs was made.

Key Issues

1. Whether the petitioner has an effective alternative remedy against the impugned orders, and if so, whether the writ petitions are maintainable? (This issue turns on Section 107 of the TNGST Act, 2017). Petitioner's contention: The petitioner argued that the assessment order and the recovery of penalty were erroneous and sought direct intervention from the High Court. The specific grounds for challenging the assessment order itself were not detailed in the provided text, but the prayer indicates a challenge to the validity of the order and the recovery. Respondent's contention: The respondent argued that the petitioner has a statutory appeal remedy available before the Appellate Authority under Section 107 of the TNGST Act, 2017, and therefore, the writ petitions filed directly before the High Court are not maintainable.