Unlike the erstwhile regimes, where filing a writ petition was considered a rare event, the GST era has witnessed innumerable writ petitions in the last four years. The question that has arisen multiple times is whether a writ petition can be filed for issues where there is an alternate remedy? Should the High Court entertain and admit all such writ petitions filed? In this write-up, we wish to discuss the legislative aspects of the issue, the Supreme Court’s take on it, and issues that still remain unanswered.
Section 2(4) of the CGST Act, 2017 defines ‘adjudicating authority as ‘any authority, appointed or authorized to pass any order or decision under this Act, but does not include the Central Board of Indirect Taxes and Customs, the Revisional Authority, the Authority for Advance Ruling, the Appellate Authority for Advance Ruling, the Appellate Authority, the Appellate Tribunal, and the Authority referred to in sub-section (2) of section 171’.
Further, Section 107 of the CGST Act, 2017 prescribes the procedure to file an appeal to the appellate authority. The said section states that an appeal against any order passed by the adjudicating authority shall lie before an appellate authority. Moreover, Section 117 of the CGST Act, 2017, prescribes the procedure to file an appeal before the High Court. The said section states that any person who is aggrieved by any order passed by the State Bench or Area Benches of the Appellate Tribunal may file an appeal before the High Court and the High Court can admit it if it involves a substantial question of law.
Therefore, any authority that is authorized to pass an order under the GST law except the ones stipulated above can be termed as an adjudicating authority. Further, any appeal against the orders passed by an adjudicating authority lies before the appellate authority. Furthermore, any appeal against the order of appellate authority lies before the High Court. It can be surmised that appeal against the orders of adjudicating authority cannot be preferred before a High Court directly.
Recently, in the case of The Assistant Commissioner of State Tax & Ors. Vs. M/s Commercial Steel Ltd. [Civil Appeal No. 5121 of 2021; 03.09.2021], the Supreme Court decided upon a similar issue.
Therefore, the Supreme Court directed that the respondent can take recourse to appropriate remedies which are available in terms of Section 107 of the CGST Act, 2017, against the order passed by the authorities.
There have been multiple cases wherein the Supreme Court and the High Courts have repeated that rule of alternate remedy cannot be surpassed and petitioners cannot reach High Courts without first exploring the alternate remedies bestowed upon them by the statute.
In the case of Hind Logistic vs. State of Uttar Pradesh [TS(DB)-GST-HC(ALL)-2018-597], the High Court dismissed the petition and directed the petitioner to prefer an equally efficacious remedy of filing an appeal under section 107 of the UPGST Act, 2017. Similarly, the Karnataka High Court in the case of L&T Hydrocarbon Engineering Limited vs. The State of Karnataka [TS(DB)-GST-HC(KAR)-2020-437], the High Court held that when the appeal is provided and the authority is notified whether the Joint Commissioner or other authority, “the matter ought to have been agitated before the appellate authority as per law” while finding “no necessity to examine and adjudicate entitlement of the relief”. Further, in the case of Krishna International vs. Commissioner of Delhi Goods and Services Tax [TS(DB)-GST-HC(DEL)-2020-491], the Delhi High Court disposed of the writ petition against rejection of refund claim by granting the liberty to appeal to the appropriate forum on account of alternative remedy being available to petitioner.
Other than the GST law, the Supreme Court in the case of Authorized Officer, State Bank of Travancore and Ors. Vs. Mathew K.C. held that High Court ought not to entertain a writ petition Under Article 226 of the Constitution if an effective alternative remedy is available. On the contrary, in the case of Uttar Pradesh Power Transmission Corp Ltd & Anr v. CG Power and Industrial Solutions Ltd & Anr, [SLP No. 8630/2020] it was held by the Apex Court that the existence of arbitrary clause cannot stop the Courts from entertaining a writ petition. Moreover, it was also held that the mere presence of an alternate remedy, does not prohibit the HC from entertaining a writ petition.
The rule of alternate remedy means that if an assessee has an alternative remedy against any of the matters under adjudication, he or she should not proceed with filing a writ petition before the High Court. This is because the High Courts have a legacy issue of overburdening which has made the judiciary system clogged. Moreover, the pendency rates of the cases in these courts give out an impression that the Indian judiciary system is inefficient, which certainly is not the case. This is one reason that Courts insist upon the doctrine of exhaustion of remedies; so that the assessee approaches the appellate authority and exhausts all options before turning towards the High Court. Further, there stands a good chance that the matters are resolved before they actually reach High Courts.
In the case of State of Himachal Pradesh v. Gujarat Ambuja Cement Ltd. [AIR 2005 SC 3856], the Supreme Court delved into the rule of alternative remedy and held that ‘It is essentially a rule of policy, convenience, and discretion and never a rule of law. Despite the existence of an alternative remedy, it is within the jurisdiction of discretion of the High Court to grant relief under Article 226 of the Constitution. At the same time, it cannot be lost sight of that though the matter relating to an alternative remedy has nothing to do with the jurisdiction of the case, normally the High Court should not interfere if there is an adequate efficacious alternative remedy. If somebody approaches the High Court without availing the alternative remedy provided the High Court should ensure that he has made out a strong case or that there exist good grounds to invoke the extraordinary jurisdiction.’ Therefore, the High courts should be wary that no interference should be made without checking if all alternative remedies have been explored.
In the GST regime, one thing that is still lacking is the formation of the appellate tribunal or the GSTAT. The Tribunal has only been on paper since the inception of the regime and somehow missing in the real world. This is one major reason that High Courts are finding long queues outside their doors. A Tribunal is a very important link in the administration and judiciary. The taxpayers generally feel that an appeal to the appellate authority may not give fruitful results because the tax officers are mostly pro revenue and there is no Tribunal; this could be a major reason why taxpayers prefer to approach the High Court before actually exploring other judicial remedies.
While we do understand the Supreme Court’s direction to not interfere where all alternative remedies have been invoked, the taxpayer can also not be blamed in entirety. The absence of GSTAT plays an important role in setting up this trend of approaching the High Court without first exploring alternate remedies. It should now be upon the GST Council to resolve this issue which has dual implications on the judiciary and the taxpayers, both. An appellate tribunal is an imperative part of the judiciary system of a country. By delaying the roll-out of the tribunal, the justice is getting delayed; and as they say – ‘Justice delayed is justice denied.
The article has been authored by Mr. Jigar Doshi – Founding Partner and Ms. Nirali Gada – Manager at TMSL- a tax technology firm. The authors can be reached at email@example.com. The view expressed are personal.
Mr. Jigar Doshi
Jigar is a Chartered Accountant with over 17 years of work experience in the field of indirect taxation. His domain of expertise includes GST, Customs, erstwhile Indirect Taxes, and UAE VAT legislation.
Mr. Sagar Shah
Sagar is a Chartered Accountant with over 12 years of work experience in the field of indirect taxation. His domain of expertise includes Business Advisory, Tax Technology in Indirect Taxes, and handling the back-office operations team for GCC.