Kamal Kishore Rathi vs. Union Of INDIA

Facts

The petitioners, Nitin Tibrewal, Kamal Kishore Rathi, and Nitish Diwan, filed writ petitions before the High Court of Chhattisgarh challenging show cause notices dated August 26, 2026, and corrigenda dated August 27, 2026. These notices were issued by the Joint Director of GST Intelligence, Raipur Zonal Unit, under Section 74 of the SGST Act, 2017, read with the CGST Act, 2017. The notices proposed penalties under Sections 122(1A), 122(3), and 125 of the CGST Act, 2017, read with Section 20 of the IGST Act, for alleged acts of omission and commission. The petitioners contended that the notices were issued without providing an opportunity for a hearing, violating principles of natural justice.

Held

The Court held that the writ petitions are not maintainable against a show cause notice when a statutory remedy of appeal is available under Section 107 of the GST Act. The Court referred to Section 107 of the GST Act, which outlines the appellate mechanism against decisions or orders passed by an adjudicating authority. It was observed that the petitioners had not exhausted this statutory remedy. The Court also cited the Supreme Court's decision in The Assistant Commissioner of State Tax and Others vs. M/s Commercial Steel Limited, which held that a writ petition under Article 226 is generally not maintainable if an alternate statutory remedy exists, unless exceptional circumstances like breach of fundamental rights, violation of natural justice, excess of jurisdiction, or challenge to the vires of a statute are established. The Court found no such exceptional circumstances in the present case. However, the Court directed that before assessing the tax liability, the respondents must comply with the GST Act in letter and spirit, granting the petitioners an opportunity of hearing. The petitioners were also directed to cooperate in the proceedings and avoid delaying them.

Key Issues

1. Whether the writ petitions are maintainable against a show cause notice issued under the GST Act when a statutory remedy of appeal is available. 2. Whether the issuance of the show cause notice without providing an opportunity for a hearing violates the principles of natural justice and fair play. The petitioners argued that the show cause notices were issued in violation of the principles of natural justice and fair play, as they were not afforded an opportunity of hearing before their issuance. The respondents contended that the GST Act provides various opportunities for the petitioners to submit their replies and evidence. They further argued that the notice itself directs the noticee to produce evidence and indicate if they wish to be heard in person. The respondents also asserted that the writ petitions are not maintainable as the petitioners have a statutory remedy of appeal under Section 107 of the GST Act against any order passed by the adjudicating authority. They relied on the Supreme Court's decision in The Assistant Commissioner of State Tax and Others vs. M/s Commercial Steel Limited.