Sursarita Vanijya Private Limited Vs Principal Commissioner of Central Tax
Date: September 1, 2024
Subject Matter
Taxpayer must first exhaust the statutory appeal remedy under Section 107 before approaching the court through a writ petition
Summary
In the case of Sursarita Vanijya (P.) Ltd. v. Principal Commissioner of CGST, the Jharkhand High Court addressed a writ petition challenging a GST demand of Rs. 42,58,557 made under Section 73 of the CGST Act. The demand was based on the assertion that the petitioner had improperly availed Input Tax Credit (ITC) in violation of Section 16(2)(c) because the petitioner’s supplier had entered liquidation under the Insolvency and Bankruptcy Code, 2016. The petitioner contended that since the supplier underwent liquidation, all liabilities, including those regarding GST, were extinguished during the process, and thus, they should not be liable for the tax demand. However, the court ruled that the petitioner must first exhaust the statutory appeal remedy under Section 107 of the CGST Act before approaching the court through a writ petition. The High Court highlighted the principle of exhaustion of remedies, stating that the petitioner should file an appeal within two weeks, and the appellate authority was directed to resolve the appeal within four weeks of its filing. The ruling reaffirmed the precedent that writ petitions should not replace statutory appeals unless exceptional circumstances justify such action.
FULL TEXT OF THE JUDGMENT/ORDER OF JHARKHAND HIGH COURT
The instant writ petition has been filed under Article 226 of the Constitution of India by seeking for the following reliefs:
(i) For issuance of an appropriate writ(s)/order(s)/direction(s) including a writ of Certiorari for quashing/setting aside the order dated 06.12.2023, received on12.12.2023 issued in Form GST DRC-07 (Annexure-12) by the Respondent No.2 wherein the Petitioner has been directed to pay an amount of Rs.42,58,557/- under Section 73, along with interest at the rate of 18% per annum under Section 50, and penalty of Rs.4,25,856/- under Section 122 (2) (a) and Rs.42,58,557/-under Section 122 (1) on the alleged ground that Input Tax Credit has been availed in contravention of Section 16 (2) (c) of the Central Goods and Services Act, 2017 (‘the Act’), especially since the seller has undergone liquidation under the provisions of the Insolvency and bankruptcy Code, 2016 (‘IBC’), and which fact was made known to the Respondent Authorities.
(ii) For issuance of an appropriate writ(s)/ order(s)/ direction(s) including a writ of Declaration for declaring that once the supplier/seller has undergone liquidation under the provisions of the Insolvency and bankruptcy Code, 2016, their liability under the Act, which were in the nature of Operational Debt have been subsumed in the liquidation process, and have been settled and /or extinguished, which cannot be recovered by the Respondents from the Petitioner in the garb of Section 16 (2) (c) of the Act.
(iii) For issuance of any other appropriate writ(s) order(s) direction(s) as Your Lordships may deem fit and proper in the facts and circumstances of the case.
2. The various issues have been pointed out regarding the merit as also violation of principle of natural justice.
3. Mr. P.S.A. Swaroop Pati, learned counsel appearing for the respondent CGST has raised the preliminary objection regarding the maintainability of the present petition on the ground of remedy of appeal under Section 107 of the CGST Act, 2017.
4. Upon this, Mr. M.S. Mittal, learned senior counsel appearing for the petitioner is having no objection.
5. Considering the same, this petition is being disposed of with liberty to file appeal within two weeks from the date of receipt of copy of this order, by raising all the issues along with the supported judgments. If such appeal will be filed, the same will be decided by the concern appellate authority within a period of four weeks from the date of receipt of copy of order of this Court, in accordance with law.
6. Accordingly, this writ petition i.e. W.P.(T) No. 1598 of 2024 stands disposed of.
(Author can be reached at info@a2ztaxcorp.com)