M/S Mohammad Maqbool Lone vs. Union Territory Of J And K And Others (State Taxes Department)

Held

The Court held that the writ petition was not maintainable. While acknowledging the power of the High Court under Article 226, it emphasized the discretion to not entertain a writ petition when an effective alternative statutory remedy is available. The Court reiterated the principle that when a statute prescribes a specific remedy, that remedy must be exhausted before invoking the discretionary writ jurisdiction, subject to exceptions like violation of fundamental rights, principles of natural justice, lack of jurisdiction, or challenge to the vires of legislation. The Court found that none of these exceptions applied. Specifically addressing the petitioner's claim of violation of natural justice due to denial of personal hearing, the Court found from the record that the petitioner had adequately participated in the proceedings and submitted a detailed reply. The Court noted that it was not the petitioner's case that they demanded a personal hearing and were denied it. The Court also observed that the petitioner had virtually admitted the mistake in their reply to the show cause notice. Consequently, the Court was not inclined to entertain the writ petition and relegated the petitioner to the statutory remedy of appeal under Section 107 of the Act. The petition was accordingly dismissed.

Facts

The petitioner, M/s Mohd Maqbool Lone, an assessee registered under GST, filed a writ petition challenging an order dated August 16, 2024, passed by the respondents. This order imposed a demand of Rs. 42,23,29,976.52/- on account of GST interest and penalty for the Financial Year 2019-2020, purportedly under Section 74 of the Goods and Services Tax Act, 2017. The petitioner challenged the order on multiple grounds, primarily touching upon its merits. The High Court noted that the impugned order was appealable under Section 107 of the Act, presenting an equally efficacious statutory remedy.

Key Issues

1. Whether the writ petition is maintainable under Article 226 of the Constitution of India in the presence of an equally efficacious statutory remedy of appeal under Section 107 of the Goods and Services Tax Act, 2017? The petitioner argued that the writ petition was maintainable because the order was passed in violation of the principles of natural justice, specifically the denial of a personal hearing, thus falling under an exception to the rule of exhausting statutory remedies. The petitioner contended that a mandatory personal hearing was not afforded before the order was passed. The respondents, implicitly through the court's reasoning, argued that the petitioner had adequately participated in the proceedings, submitted a detailed reply to the show cause notice, and therefore could not claim a denial of adequate opportunity to defend themselves. They also contended that the petitioner had virtually admitted the mistake leading to tax evasion in their reply, and the order was not ex-facie passed in violation of natural justice. Furthermore, it was not contended that the authority passing the order under Section 74 was incompetent.