M/S Royal Enterprises Through Vimal Kurana vs. Union Of INDIA

Held

The Court addressed two primary issues. Firstly, regarding territorial jurisdiction, it held that the Indore Bench has jurisdiction. Citing its own Division Bench judgment in Shrigovind Niranjan, the Court stated that even a small fraction of the cause of action accruing within the jurisdiction is sufficient. The Court noted that the petitioner has GST registration and a place of business in Indore, and the search and material supply occurred there, thus establishing jurisdiction for the Indore Bench, despite the assessing authority being in Bhopal. Secondly, concerning the maintainability of the writ petition due to the availability of an appeal remedy, the Court held that while writ petitions are maintainable in certain circumstances (lack of jurisdiction, challenge to vires, gross violation of natural justice), the petitioner's claim of violation of natural justice, specifically the denial of cross-examination, was not sufficiently substantiated. The Court found that the petitioner failed to demonstrate when the request for cross-examination was made and whether any prejudice was caused. It emphasized that the appellate authority is competent to examine such issues after reviewing the record and the relevancy of witness depositions. The Court relied heavily on the Supreme Court's decision in State of Maharashtra & Others v/s Greatship (India) Limited, which held that High Courts should relegate petitioners to statutory remedies when available, especially when there are disputes on facts and no valid reasons are shown to bypass the appeal process. Consequently, the Court dismissed all writ petitions, granting liberty to the petitioners to approach the appellate authority within a specified period, with the appellate authority directed to decide the appeal on merits without raising objections of limitation, subject to other statutory conditions.

Facts

The petitioners, including M/s Goyal Trading Co., M/s Royal Enterprises, M/s TNH Mercantile Private Limited, and M/s Bharat Scrap, filed writ petitions challenging an order in original dated December 19, 2024, passed by the Additional Commissioner, Central Goods & Service Tax, Bhopal. This order pertained to the tax periods 2017-18 and 2018-19 and imposed recovery of Input Tax Credit (ITC), interest, and penalty. The impugned order stemmed from an investigation by the DGGI, Bhopal Unit, against M/s R.A. Enterprises for allegedly availing and passing on fake/bogus ITC amounting to Rs. 1,39,03,814/- on a taxable value of Rs. 7,72,43,380/-. Show-cause notices were issued to 18 noticees, including the petitioners, under Section 74 and Section 122(1)(ii) of the CGST Act, read with Section 20 of the IGST Act. The petitioners approached the High Court under Article 226 of the Constitution of India, bypassing the statutory appeal remedy under Section 107 of the CGST Act.

Key Issues

1. Whether the writ petition is maintainable before the Indore Bench of the High Court, considering the assessing authority is located in Bhopal, despite the petitioner having GST registration and place of business in Indore, and the search and supply of materials occurring in Indore? (Question of jurisdiction) 2. Whether the writ petition is maintainable in light of the availability of an efficacious statutory remedy of appeal under Section 107 of the CGST Act? Petitioner's Arguments: The petitioners contended that the writ petition is maintainable as the order in original was passed in gross violation of the principles of natural justice. Specifically, they argued that the respondent authority did not allow cross-examination of witnesses, failed to consider their submissions, and erred in issuing a common notice for different financial years. They relied on several High Court judgments, including Bharat Mint & Allied Chemicals, Andaman Timber Industries, and Titan Company Limited, to support the maintainability of a writ petition against an order in original. Revenue's Arguments: The respondents argued that the writ petition is not maintainable due to the availability of an efficacious statutory remedy of appeal. They submitted that the petitioner approached the High Court to avoid the pre-deposit condition of 10% of the tax under recovery. They cited Supreme Court judgments in State of Maharashtra & Others v/s Greatship (India) Limited and a Division Bench judgment of the High Court in Shrigovind Niranjan & Others v/s The State of Madhya Pradesh & Others to support their contention.