Kamal Kishore Rathi vs. Union Of INDIA

Facts

The petitioner, Kamal Kishore Rathi, filed a writ petition challenging a show cause notice dated August 26, 2026, issued by the Joint Director, GST Intelligence (Respondent No. 2). The notice, issued under Section 74 of the SGST Act, 2017, read with the CGST Act, 2017, called upon the petitioner and others to show cause why penalties should not be imposed under Sections 122(1A), 122(3), and 125 of the CGST Act, 2017, read with Section 20 of the IGST Act. A corrigendum dated August 27, 2026, was also challenged. The petitioner contended that the notice was issued in violation of natural justice principles as no opportunity for a hearing was provided. The respondents argued that the petitioner had been provided with opportunities to reply and that an alternative remedy of appeal under Section 107 of the GST Act was available.

Held

The Court held that a writ petition challenging a show cause notice is ordinarily not maintainable when an alternative statutory remedy of appeal is available under the GST Act, unless there is an allegation of jurisdictional error or a challenge to the competence of the issuing authority. The Court referred to Section 107 of the GST Act, which provides for appeals to the Appellate Authority, and the Supreme Court's decision in The Assistant Commissioner of State Tax and Others vs. M/s Commercial Steel Limited, which emphasized the importance of exhausting statutory remedies. The Court found that the petitioner had not established any exceptional circumstances, such as a breach of fundamental rights, violation of principles of natural justice, excess of jurisdiction, or a challenge to the vires of the statute, that would justify entertaining the writ petition. The Court also noted a circular dated March 12, 2022, which clarified the powers of the DGGI to issue show cause notices, with adjudication to be done by competent executive Commissionerate officers, thereby addressing potential jurisdictional grievances. However, the Court directed that before determining the tax liability, the respondent must comply with the GST Act by affording the petitioner an opportunity of hearing. The writ petition was dismissed on the grounds of non-maintainability due to the availability of an alternative remedy.

Key Issues

1. Whether a writ petition challenging a show cause notice issued under the GST Act is maintainable when an alternative statutory remedy of appeal is available (Section 107 of the CGST Act)? Petitioner's Argument: The petitioner argued that the show cause notice was issued in violation of the principles of natural justice and fair play, as it was issued without affording an opportunity of hearing. This suggests a procedural illegality that may warrant intervention by the High Court. Respondent's Argument: The respondent contended that the writ petition is not maintainable because the petitioner has an alternative statutory remedy of appeal under Section 107 of the GST Act. They argued that the show cause notice itself provides opportunities for the petitioner to submit a reply and request a personal hearing, and that challenging the notice before adjudication and appeal is premature. They also cited the Supreme Court's decision in The Assistant Commissioner of State Tax vs. M/s Commercial Steel Limited.