Sns Minerals Private Limited vs. Assistant Commissioner

Held

The Court held that the writ petition is liable to be dismissed. The Court noted that the Petitioner had contested the second show cause notice, an order was passed, and an appeal was preferred which was dismissed. The Petitioner cannot bypass the statutory remedy of appeal before the GST Appellate Tribunal by directly approaching the High Court. Citing the Supreme Court decisions in Whirlpool Corporation v. Registrar of Trade Marks and Radha Krishan Industries v. State of H.P., the Court emphasized that while the High Court has discretion under Article 226, it should not ordinarily entertain a writ petition when an effective alternate statutory remedy is available. The exceptions to this rule (fundamental rights violation, principles of natural justice violation, lack of jurisdiction, or challenge to vires of legislation) were not met by the Petitioner. The Petitioner did not allege violation of natural justice, nor challenged the competency of the authorities or the constitutional validity of any statute. Therefore, the Petitioner must avail the statutory remedy before the GST Appellate Tribunal. The Court dismissed the petition with liberty to the Petitioner to file an appeal before the GST Appellate Tribunal, and the interim relief granted to the Petitioner shall continue until the GST Appellate Tribunal decides the application for stay.

Facts

The Petitioner, SNS Minerals Private Limited, engaged in mining and supplying limestone, paid GST at 18% on royalty under reverse charge mechanism for April 2018 to December 2018, while its output supply was taxed at 5%, leading to accumulated input tax. After reversing the credit, the Petitioner claimed a refund of ₹84,26,536/- under Section 54(3) of the CGST Act. A show cause notice was issued, and despite the Petitioner clarifying credit reversal, the refund was initially rejected by Respondent No. 1. The Appellate Authority (Respondent No. 3) allowed the Petitioner's appeal, setting aside the rejection. Consequently, the refund was sanctioned and disbursed. Subsequently, Respondent No. 2 initiated review proceedings, leading to a show cause notice for recovery under Section 73 of the CGST Act and an appeal by the Department against the refund sanction order. Respondent No. 3, in its impugned Order-in-Appeal dated 17.02.2023, allowed the Department's appeal and set aside the previously granted refund, prompting the Petitioner to file a writ petition.

Key Issues

1. Whether the impugned Order-in-Appeal dated 17.02.2023 passed by Respondent No. 3 is illegal, arbitrary, and without jurisdiction, particularly as it appears to sit in appeal over its own earlier Order-in-Appeal dated 20.05.2021 which had attained finality? (Section 54 CGST Act, Article 226 Constitution of India) 2. Whether Respondent No. 3 became functus officio after passing the Order-in-Appeal dated 20.05.2021 and could not have reopened the same issue by entertaining an appeal against the subsequent refund sanction order? 3. Whether the impugned order travels beyond the scope of the show cause notice and introduces new grounds at the appellate stage? 4. Whether the initiation of parallel proceedings under Section 73 of the CGST Act for recovery of the same amount is permissible? Petitioner's arguments: The impugned order is illegal and arbitrary as Respondent No. 3 reviewed its own earlier order which had attained finality. The authority became functus officio and could not re-examine the concluded issue. The action amounts to colourable exercise of power and judicial impropriety. The Department failed to challenge the earlier order before a higher forum. The impugned order goes beyond the show cause notice and introduces new grounds. Parallel proceedings under Section 73 are an abuse of process. The order is non-speaking and violative of natural justice. Respondents' arguments: The impugned order is in accordance with law. The refund sanction order was erroneous and prejudicial to revenue. The Department is empowered to review and challenge legally unsustainable orders. The appeal against the refund sanction order was maintainable. The Petitioner was not entitled to the refund as input tax credit was availed. The earlier and subsequent proceedings operate in distinct fields.