THE ASSISTANT COMMISSIONER OF STATE TAX AND OTHERSversusM/S. COMMERCIAL STEEL LIMITED

660                      [2021]REPORTS
               SUPREME COURT    7 S.C.R. 660                 [2021] 7 S.C.R.


A        THE ASSISTANT COMMISSIONER OF STATE TAX AND
                           OTHERS
                                         v.
                    M/S. COMMERCIAL STEEL LIMITED
B                        (Civil Appeal No. 5121 of 2021)
                             SEPTEMBER 03, 2021
                 [DR DHANANJAYA Y CHANDRACHUD,
                 VIKRAM NATH AND HIMA KOHLI, JJ.]
             Constitution of India – Ar.226 – Central Goods and Services
C
      Tax Act 2017 – s.107 – The case of Revenue that in the guise of an
      inter-State sale, the respondent was attempting to sell the goods in
      the local market by evading SGST and CGST – An order of detention
      was issued and a notice was served on the person in charge of the
      conveyance –The respondent paid tax and penalty, following which
D     the goods and the conveyance were released –Writ petition was
      filed by the respondent – The High Court ordered the refund of the
      amount collected towards tax and penalty together with interest –
      Before the Supreme Court, the appellant contended that the High
      Court was in error in entertaining the writ petition u/Art.226 of the
      Constitution, having regard to the statutory alternative remedy which
E
      is available u/s.107 of the CGST Act –Held: The respondent had a
      statutory remedy u/s.107 – Instead of availing the remedy, the
      respondent instituted a petition u/Art.226 – The existence of an
      alternate remedy is not an absolute bar to the maintainability of a
      writ petition u/Art.226 of the Constitution – But a writ petition can
F     be entertained in exceptional circumstances where there is: (i) a
      breach of fundamental rights; (ii) a violation of the principles of
      natural justice; (iii) an excess of jurisdiction; or (iv) a challenge to
      the vires of the statute or delegated legislation – In the instant case,
      none of the exceptions was established – There was no violation of
      the principles of natural justice, as notice was served on the person
G
      in charge of the conveyance – It was not appropriate for the High
      Court to entertain a writ petition –Thus, respondent relegated to
      pursue the alternate statutory remedy u/s.107 of the CGST Act –
      The impugned order of the High Court is set aside.

H
                                        660
THE ASSISTANT COMMISSIONER OF STATE TAX AND OTHERS v. M/S.                  661
 COMMERCIAL STEEL LTD. [DR DHANANJAYA Y CHANDRACHUD, J.]


        CIVIL APPELLATE JURISDICTION: Civil Appeal No.5121 of               A
2021.
      From the Judgment and Order dated 04.03.2020 of the High Court
of Judicature at Hyderabad for the State of Telangana in Writ Petition
No.2161 of 2020.
     Prashant Tyagi, P. Venkat Reddy, P. Srinivas Reddy, M/s Venkat         B
Palwai Law Associates, Advs. for the Appellants.
     Shaik Mohamad Hanif, Mrs. Srilakshmi Velicheti, Mrs. Divya
Mishra, Mrs. Suresh Kumar, Irshad Ahmad, Advs. for the Respondent.
        The Judgment of the Court was delivered by                          C
        DR DHANANJAYA Y CHANDRACHUD, J.
        1. Leave granted.
      2. This appeal arises from a judgment of a Division Bench of the
High Court of Telangana dated 4 March 2020.
                                                                            D
       3. The High Court in the exercise of its writ jurisdiction under
Article 226 of the Constitution set aside the action of the appellants in
collecting an amount of Rs 4,16,447 from the respondent towards tax
and penalty under the Central Goods and Services Tax Act 2017 (CGST)
and State Goods and Services Tax Act (SGST) and directed a refund
together with interest at the rate of 6% per annum from 13 December         E
2019. A further direction has been issued to the State of Telangana to
consider initiating disciplinary proceedings against the Assistant
Commissioner. Costs of Rs 25,000 have been imposed on the first
appellant, who was the first respondent before the High Court.
       4. The respondent is a proprietary concern engaged in the business   F
of iron and steel and is registered under the Central Goods and Services
Tax Act 2017 and has been allotted a GST code. The respondent
purchased certain goods from a dealer, JSW Steel Limited, Vidyanagar,
Karnataka, under a tax invoice dated 11 December 2019. The
consignment of goods was being carried in a truck bearing registration      G
No KA 35 C 0141. While it was proceeding from the State of Karnataka,
it was intercepted on 12 December 2019 at 5.30 pm at Jeedimetala. The
tax invoice indicated that the goods were earmarked for delivery at
Balanagar, Telangana. The case of the appellants is that Balanagar is
situated between the State of Karnataka and Jeedimetala and that no
                                                                            H
662             SUPREME COURT REPORTS                            [2021] 7 S.C.R.


A     reasonable person would cross Balanagar and then turn around to go
      back to the place of destination. The purchase value of the goods
      appeared to be in the amount of Rs 11,14, 579 from the tax invoices.
              5. The case of the revenue was that in the guise of an inter-State
      sale, the respondent was attempting to sell the goods in the local market
B     by evading SGST and CGST. An order of detention was issued in Form
      GST MOV-06 on 12 December 2019 and a notice was served on the
      person in charge of the conveyance. The respondent paid the tax and
      penalty, following which the goods and the conveyance were released
      on 13 December 2019.
C            6. The respondent instituted writ proceedings under Article 226
      of the Constitution before the High Court in order to challenge the order
      of detention dated 12 December 2019 and the notice which was issued
      under Section 20 of the IGST Act 2017. A refund of tax was sought. A
      counter affidavit was filed on behalf of the appellants before the High
      Court.
D
             7. The High Court entertained the writ petition and ordered the
      refund of the amount collected towards tax and penalty together with
      interest. The High Court has observed that a mere possibility of a local
      sale would not clothe the officials to take such an action and there was
      no material to indicate that an attempt was made by the respondent to
E     deliver the goods at a different place and to sell them in the local market
      evading CGST and SGST. The High Court has also come to the
      conclusion that since the vehicle was being driven from Karnataka by
      the local driver from that State, “it is perfectly possible for the driver to
      lose his way on account of being unfamiliar with the roads” in Hyderabad
F     and bypass Balanagar to proceed to Jeedimetala.
             8. Mr Prashant Tyagi, counsel appearing on behalf of the appellant
      submits that the High Court was in error in entertaining the writ petition
      under Article 226 of the Constitution, having regard to the statutory
      alternative remedy which is available under Section 107 of the CGST
G     Act. Counsel urged that while the existence of an alternative remedy
      under the statute is not an absolute bar to the maintainability of a writ
      petition under Article 226, none of the exceptions which have been
      enunciated by the judgments of this Court apply in this case. Hence, it
      has been urged that the High Court ought not to have entertained the
      writ petition. On merits, it has been submitted that the High Court has
H     proceeded on the basis of surmises.
THE ASSISTANT COMMISSIONER OF STATE TAX AND OTHERS v. M/S.                      663
 COMMERCIAL STEEL LTD. [DR DHANANJAYA Y CHANDRACHUD, J.]


       9. On the other hand, it was urged by Mr Shaik Mohamad Haneef,           A
counsel for the respondent that the High Court having entertained the
writ petition, it was justified on merits in setting aside the detention and
the order by which the tax and penalty was collected under duress.
Hence, it is urged that no interference of this Court is warranted.
      10. Section 107 is extracted below:                                       B
      “107. Appeals to Appellate Authority – (1) Any person
      aggrieved by any decision or order passed under this Act or the
      State Goods and Services Tax Act or the Union Territory Goods
      and Services Tax Act by an adjudicating authority may appeal to
      such Appellate Authority as may be prescribed within three months         C
      from the date on which the said decision or order is communicated
      to such person.
      (2) The Commissioner may, on his own motion, or upon request
      from the Commissioner of State tax or the Commissioner of Union
      territory tax, call for and examine the record of any proceedings         D
      in which an adjudicating authority has passed any decision or order
      under this Act or the State Goods and Services Tax Act or the
      Union Territory Goods and Services Tax Act, for the purpose of
      satisfying himself as to the legality or propriety of the said decision
      or order and may, by order, direct any officer subordinate to him
      to apply to the Appellate Authority within six months from the            E
      date of communication of the said decision or order for the
      determination of such points arising out of the said decision or
      order as may be specified by the Commissioner in his order.
      (3) Where, in pursuance of an order under sub-section (2), the
      authorised officer makes an application to the Appellate Authority,       F
      such application shall be dealt with by the Appellate Authority as
      if it were an appeal made against the decision or order of the
      adjudicating authority and such authorised officer were an
      appellant and the provisions of this Act relating to appeals shall
      apply to such application.                                                G
      (4) The Appellate Authority may, if he is satisfied that the appellant
      was prevented by sufficient cause from presenting the appeal
      within the aforesaid period of three months or six months, as the
      case may be, allow it to be presented within a further period of
      one month.
                                                                                H
664      SUPREME COURT REPORTS                            [2021] 7 S.C.R.


A     (5) Every appeal under this section shall be in such form and shall
      be verified in such manner as may be prescribed.
      (6) No appeal shall be filed under sub-section (1), unless the
      appellant has paid—
         (a) in full, such part of the amount of tax, interest, fine, fee and
B        penalty arising from the impugned order, as is admitted by him;
         and
         (b) a sum equal to ten per cent. of the remaining amount of tax
         in dispute arising from the said order, subject to a maximum of
         twenty-five crore rupees, in relation to which the appeal has
C        been filed:
      Provided that no appeal shall be filed against an order under sub-
      section (3) of Section 129, unless a sum equal to twenty-five per
      cent. of the penalty has been paid by the appellant.

D     (7) Where the appellant has paid the amount under sub-section
      (6), the recovery proceedings for the balance amount shall be
      deemed to be stayed.
      (8) The Appellate Authority shall give an opportunity to the appellant
      of being heard.
E     (9) The Appellate Authority may, if sufficient cause is shown at
      any stage of hearing of an appeal, grant time to the parties or any
      of them and adjourn the hearing of the appeal for reasons to be
      recorded in writing:
      Provided that no such adjournment shall be granted more than
F     three times to a party during hearing of the appeal.
      (10) The Appellate Authority may, at the time of hearing of an
      appeal, allow an appellant to add any ground of appeal not specified
      in the grounds of appeal, if it is satisfied that the omission of that
      ground from the grounds of appeal was not wilful or unreasonable.
G     (11) The Appellate Authority shall, after making such further inquiry
      as may be necessary, pass such order, as it thinks just and proper,
      confirming, modifying or annulling the decision or order appealed
      against but shall not refer the case back to the adjudicating
      authority that passed the said decision or order:
H
THE ASSISTANT COMMISSIONER OF STATE TAX AND OTHERS v. M/S.                    665
 COMMERCIAL STEEL LTD. [DR DHANANJAYA Y CHANDRACHUD, J.]


      Provided that an order enhancing any fee or penalty or fine in lieu     A
      of confiscation or confiscating goods of greater value or reducing
      the amount of refund or input tax credit shall not be passed unless
      the appellant has been given a reasonable opportunity of showing
      cause against the proposed order:
      Provided further that where the Appellate Authority is of the           B
      opinion that any tax has not been paid or short-paid or erroneously
      refunded, or where input tax credit has been wrongly availed or
      utilised, no order requiring the appellant to pay such tax or input
      tax credit shall be passed unless the appellant is given notice to
      show cause against the proposed order and the order is passed
      within the time limit specified under Section 73 or Section 74.         C

      (12) The order of the Appellate Authority disposing of the appeal
      shall be in writing and shall state the points for determination, the
      decision thereon and the reasons for such decision.
      (13) The Appellate Authority shall, where it is possible to do so,      D
      hear and decide every appeal within a period of one year from
      the date on which it is filed:
      Provided that where the issuance of order is stayed by an order
      of a court or Tribunal, the period of such stay shall be excluded in
      computing the period of one year.                                       E
      (14) On disposal of the appeal, the Appellate Authority shall
      communicate the order passed by it to the appellant, respondent
      and to the adjudicating authority.
      (15) A copy of the order passed by the Appellate Authority shall
      also be sent to the jurisdictional Commissioner or the authority        F
      designated by him in this behalf and the jurisdictional Commissioner
      of State tax or Commissioner of Union Territory Tax or an
      authority designated by him in this behalf.
      (16) Every order passed under this section shall, subject to the
      provisions of Section 108 or Section 113 or Section 117 or Section      G
      118 be final and binding on the parties.”
      11. The respondent had a statutory remedy under section 107.
Instead of availing of the remedy, the respondent instituted a petition
under Article 226. The existence of an alternate remedy is not an absolute
bar to the maintainability of a writ petition under Article 226 of the        H
666                SUPREME COURT REPORTS                         [2021] 7 S.C.R.


A     Constitution. But a writ petition can be entertained in exceptional
      circumstances where there is:
            (i) a breach of fundamental rights;
            (ii) a violation of the principles of natural justice;
B           (iii) an excess of jurisdiction; or
            (iv) a challenge to the vires of the statute or delegated legislation.
             12. In the present case, none of the above exceptions was
      established. There was, in fact, no violation of the principles of natural
      justice since a notice was served on the person in charge of the
C     conveyance. In this backdrop, it was not appropriate for the High Court
      to entertain a writ petition. The assessment of facts would have to be
      carried out by the appellate authority. As a matter of fact, the High
      Court has while doing this exercise proceeded on the basis of surmises.
      However, since we are inclined to relegate the respondent to the pursuit
D     of the alternate statutory remedy under Section 107, this Court makes
      no observation on the merits of the case of the respondent.
             13. For the above reasons, we allow the appeal and set aside the
      impugned order of the High Court. The writ petition filed by the
      respondent shall stand dismissed. However, this shall not preclude the
      respondent from taking recourse to appropriate remedies which are
E
      available in terms of Section 107 of the CGST Act to pursue the grievance
      in regard to the action which has been adopted by the state in the
      present case.
            14. Pending applications, if any, stand disposed of.
F
      Ankit Gyan                                                     Appeal allowed.




G




H