M/S.E.I.D.Parry (INDIA) LTD. vs. Joint Commissioner

Facts

The petitioner, M/s.E.I.D.Parry (India) Ltd., filed a writ petition challenging an Order-in-Original dated 14.02.2018 passed by the Joint Commissioner, GST and Central Excise. This order denied CENVAT credit amounting to Rs.1,74,08,326/- which the petitioner had availed during the period from April 2015 to March 2016. The petitioner contended that the impugned order relied on an interim stay order from the Tribunal, which is not a binding precedent. They also argued that the authority failed to follow binding precedents regarding Rule 6(3) of the Cenvat Credit Rules, 2004, leading to a violation of natural justice and a failure of justice. The petitioner approached the High Court directly as the appeal period had lapsed.

Held

The Court held that while the general rule is to exhaust alternative remedies, a writ petition can be entertained under Article 226 of the Constitution of India in specific circumstances, including when the authority has acted without jurisdiction, in excess of jurisdiction, or in flagrant disregard to law, rules, or procedure, or in violation of principles of natural justice, leading to a failure of justice or gross injustice. The Court found that in the present case, the order passed by the original authority was contrary to judicial discipline, in flagrant disregard to law and rules, and in violation of principles of natural justice, by relying on an interim order and ignoring binding precedents. Therefore, instead of keeping the matter pending for years, the Court decided to set aside the Order-in-Original and remand the matter back to the first respondent for fresh consideration. The petitioner was directed to deposit 10% of the tax due within four weeks.

Key Issues

1. Whether the High Court can entertain a writ petition challenging an Order-in-Original when an alternative remedy of appeal exists, as per Section 226 of the Constitution of India and the principles laid down in Singh Enterprises vs. CCE? - Petitioner's argument: The petitioner contended that the alternative remedy of appeal was an empty formality due to the lapsed limitation period and that the impugned order was passed in flagrant disregard to law, rules, or procedure, or in violation of principles of natural justice, resulting in a failure of justice. They relied on the Supreme Court case of Amresh Tiwari vs. Lalta Prasad Dubey and another to argue that interim orders are not binding precedents. - Respondents' argument: The respondents relied on the Supreme Court judgment in Singh Enterprises vs. CCE to argue that the High Court cannot entertain a writ petition.