Goods & Services Tax (GST) in IndiaWrit Remedy cannot be invoked without Exhausting Alternative Statutory Remedy Available with the Taxpayer

The Kerala High Court, in Ayyappan Pillai v. The State Tax Officer, Kerala & Ors. [WP(C) NO. 29409 OF 2024 decided on 30.09.2024] dismissed a writ petition challenging the invocation of Section 74 of the CGST/Act. The Court held that writ remedy shall be invoked sparingly and appropriate adjudication process shall be exhausted for deciding the factual aspects of the dispute.

FACTS
Ayyappan Pillai (hereinafter referred to as “the Petitioner”) is a registered dealer under the CGST/SGST Acts. The Petitioner received a show cause notice under Section 74 of the CGST Act (hereinafter referred to as the “SCN”) from the State Tax Officer, Kerala (hereinafter referred to as “the Respondent No.1”) which directed to show cause against the proposals in the SCN.
The Petitioner filed a reply against the SCN and after according personal hearing, an Order-in-Original was passed confirming demand against the Petitioner by the Deputy Commissioner (hereinafter referred to as the “Respondent No.2”).

The Petitioner filed a rectification application under Section 161 of the CGST Act against the Order-in-Original, which was also considered and rejected by the Respondent No.2 (hereinafter referred to as the “Impugned Order”).

Being aggrieved and dissatisfied by the Impugned Order, the Petitioner has preferred the present Petition.

ISSUES BEFORE THE KERALA HIGH COURT
1. Whether the present Petition is maintainable before this Hon’ble Court?
2. Whether the provision of Section 74 of the CGST Act was invokable in the SCN?
3. Whether the Order-in-Original passed by the Petition is based on incorrect facts?
4. Whether the Impugned Order passed against the Rectification Application was as per the law?

CONTENTION OF THE PARTIES
The Petitioner contended that there was no reason of invocation of Section 74 of CGST Act as there is no suppression or misstatement on the part of the Petitioner. Whereas, the reason stated in SCN is that the Petitioner is not a registered person, which is factually incorrect.
The Petitioner submitted that the entire proceedings including the passing of Impugned Order has been erroneously done without considering actual facts and hence, the Order-in-original as well as the Impugned Order shall be quashed and set aside.

The Respondents contended that the Section 74 of the CGST Act had been adequately invoked and the SCN, Order-in-Original as well as the Impugned Order reflects the same. It was submitted that the discrepancy in stock reflected that there were unaccounted sales by the Petitioner. It was also argued that the facts were correctly stated as the SCN states that the Petitioner was a registered person. However, usage of word “register” refers to failure to actual sales and suppression.

DECISION AND FINDINGS
The High Court examined the SCN, Order-in-Original as well as the Impugned Order and opined that the SCN at various instances have made out a case for invocation of Section 74 of the CGST Act. It was held that in case of disputes of facts, the Petitioner could have proceeded with the adjudicatory process under the statute and shall not have invoked the writ remedy embedded in Article 226 of the Constitution of India.

It was also observed that the Courts under Article 226 cannot refer and check on the factual aspects. Hence, dismissed the petition, and observed that the time of filing of rectification application shall be excluded and an appeal shall be preferred before the Appellate Authority.

AMLEGALS REMARKS
The Kerala High Court has upheld that the writ remedy under Article 226 shall be invoked in sparing manner when no other alternate remedy is available with the Petitioner. Moreover, under writ remedy, the Courts cannot deal on the factual aspects of the case unless the adjudication process stipulated under the statute is completed.