Calcutta HC Condemns Misusing Extraordinary Jurisdiction of HC for Delaying Revenue Deposit, Imposes ₹1 Lakh Cost on Company [Read Order]

The Calcutta High Court has strongly criticized the abuse of its extraordinary writ power under Article 226 of the Constitution for the purpose of delaying statutory GST ( Goods and Services Tax ) payments.

Justice Raja Basu Chowdhury dismissed a writ petition as withdrawn filed by Merc Infra India Private Limited & Anr. but imposed a cost of ₹1,00,000 on the petitioners, payable to the GST authorities.

The petitioners had initially challenged an assessment order dated 12 April 2024 passed under Section 73(9) of the GST Act, 2017 for the tax period April 2018-March 2019. The High Court had, on 9 September 2024, permitted them to file an appeal before the appellate authority under Section 107, which was subsequently disposed of by order dated 18 December 2024.

On 1 March 2025, the petitioners approached the High Court again, questioning the appellate order on the ground that the GST Appellate Tribunal was yet to be constituted.

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However, when the matter was taken up, they sought to withdraw the petition stating a GST circular dated 11 July 2024. The circular allowed taxpayers to defer payment of disputed tax demands by depositing the pre-deposit amount specified under Section 112(8) and furnishing an undertaking to file an appeal once the Tribunal became functional.

The Court noted that this circular was already in force when the writ was filed. It observed that the petitioners had used the litigation process to delay deposit of revenue that had been determined by the tax authorities.

Justice Chowdhury held that “petitioners cannot be permitted to invoke the extra ordinary jurisdiction of this Court to delay the revenue deposit. However, since the petitioners do not wish to proceed with the writ petition and seek to withdraw the same, let the writ petition be dismissed as withdrawn subject to payment of costs of Rs.1,00,000/- to be paid by the petitioners to the GST authorities.”

The Court imposed a cost of ₹1,00,000 to deter similar attempts in the future and directed that the amount be paid to the GST authorities.

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