M/S Naman Industries Through Its Proprietor Rajesh Mehta vs. The State Of Madhya Pradesh

Held

The Court held that the writ petition is not maintainable due to the availability of an efficacious alternative remedy. The Court noted that the petitioner themselves acknowledged the appealable nature of the impugned order under Section 107 of the GST Act, 2017. Citing Supreme Court precedents, the High Court emphasized that statutory appeals are the prescribed mechanism for challenging such orders. Therefore, the Court found it improper to entertain the writ petition. The question of granting an interim stay on the impugned recovery notice did not arise as the petition was dismissed on grounds of maintainability. The petitioner was granted liberty to avail the alternative remedy by filing an appeal under Section 107 of the GST Act, 2017, along with an application for stay, if advised.

Facts

The petitioner, M/s Naman Industries, engaged in manufacturing Lead Ingots, is challenging show-cause notice dated 25.09.2023 and adjudication order dated 19.12.2023. These were issued following an audit for FY 2017-18 and 2018-19, which revealed that a supplier, M/s Royal Traders, had availed Input Tax Credit (ITC) against invoices for which it had not filed GSTR-3B returns. Consequently, M/s Royal Traders' GST registration was cancelled. A spot memo was drawn against the petitioner demanding ₹3,07,19,525/-. The petitioner's replies were deemed unsatisfactory, leading to the show-cause notice demanding ₹1,30,45,898/- for 2017-18 and ₹1,76,73,629/- for 2018-19. The adjudication order confirmed this demand. The petitioner argues that the supplier's default should not lead to recovery from them and that the adjudication order is cryptic.

Key Issues

1. Whether the writ petition is maintainable when an alternative efficacious remedy of statutory appeal under Section 107 of the GST Act, 2017 is available? Petitioner's arguments: The petitioner contends that the impugned orders are liable to be quashed because the demand was raised erroneously against them for a supplier's default, and the adjudication order is cryptic, lacking proper reasoning. They implicitly argue that these grounds warrant intervention by the High Court under its writ jurisdiction. Revenue/State's arguments: The respondents/State raise a preliminary objection, arguing that the writ petition is not maintainable because the petitioner admits the availability of a statutory appeal under Section 107 of the GST Act, 2017. They rely on Supreme Court judgments in Hindustan Coca Cola Beverage Private Limited vs. Union of India, Hameed Kunju vs. Nizam, and Ansal Housing and Construction Limited vs. State of Uttar Pradesh, which emphasize availing statutory remedies when provided.