M/S Mahendra Sponge And Power Limited vs. Assistant Commissioner State Tax

Held

The High Court held that the existence of an alternative remedy is not an absolute bar to invoking the writ jurisdiction, especially when there is a violation of the principles of natural justice. The Court found it evident that the appellant had prayed for a personal hearing, which was admittedly not granted by the respondent. Therefore, it would not be equitable to relegate the appellant to the alternative remedy. Consequently, the Court set aside the order of the learned Single Judge dated 04.05.2022 and the order dated 02.02.2022 passed by the respondent. The respondent was directed to issue a notice to the appellant within 10 days, fixing a date for a personal hearing. At the time of the personal hearing, the appellant would be at liberty to press the contention that the notice dated 11.10.2021 is not a show-cause notice. The respondent is to pass appropriate orders after granting the opportunity of hearing within 45 days from the date of hearing. Until such an order is passed, the balance amount shall not be recovered from the appellant. The ratio decidendi is that a violation of the principles of natural justice, such as the denial of a requested personal hearing, can justify the exercise of writ jurisdiction despite the availability of an alternative statutory remedy.

Facts

The appellant, M/s Mahendra Sponge and Power Limited, filed a writ petition challenging an order passed by the Assistant Commissioner, State Tax (SGST). The learned Single Judge declined to entertain the writ petition, directing the appellant to avail the alternative remedy under Section 107 of the Chhattisgarh Goods and Services Tax Act, 2017. The Single Judge noted that a notice under Section 61, followed by a show-cause notice under Section 73 of the CGST/SGST Act, was issued, leading to the determination of tax liabilities, interest, and penalty. The appellant appealed this decision to the High Court, arguing that the Single Judge failed to consider Section 75(4) of the Act, which mandates a personal hearing upon request, and that a personal hearing was indeed requested but not granted. The appellant also contended that the notice dated 11.10.2021 was wrongly construed as a show-cause notice.

Key Issues

1. Whether the learned Single Judge erred in declining to entertain the writ petition on the ground of alternative remedy, despite alleged violation of principles of natural justice by non-grant of personal hearing, as contemplated under Section 75(4) of the CGST/SGST Act, 2017? Petitioner's Arguments: The appellant argued that the learned Single Judge overlooked Section 75(4) of the Act, which mandates granting an opportunity of hearing when a written request is received from the person chargeable with tax or penalty, or when an adverse decision is contemplated. The appellant contended that they had specifically requested a personal hearing through letters dated 20.08.2021 and 30.10.2021, but no such hearing was provided. Furthermore, the appellant argued that the notice dated 11.10.2021 was erroneously interpreted as a show-cause notice by the Single Judge. Respondent's Arguments: The respondent conceded that no personal hearing was granted. The respondent explained that although the appellant requested time to file a reply to the notice dated 11.10.2021, no reply was subsequently filed. The respondent also noted the appellant's plea that the notice dated 11.10.2021 was merely a summary of demand as per Rule 142(1) of the GST Rules, 2017, and not a detailed show-cause notice.