Facts of the Case

The petitioner, M/s Mohd Maqbool Lone, was an assessee registered under the Goods and Services Tax law. It challenged an order dated 31 December 2025, whereby a demand of ₹36,00,58,562.16 towards GST, interest and penalty was raised for Financial Year 2018-19 under Section 74 of the Goods and Services Tax Act, 2017.

The petitioner challenged the demand order on multiple grounds, most of which, as specifically noted by the High Court, touched upon the merits of the assessment.

Instead of filing the statutory appeal available under Section 107 of the Act, the petitioner invoked the extraordinary writ jurisdiction of the High Court under Article 226 of the Constitution of India.

The principal basis advanced for maintaining the writ petition despite the statutory appellate remedy was an alleged violation of the principles of natural justice, particularly the contention that a mandatory personal hearing had not been afforded before passing the impugned order.

The High Court therefore examined whether the case fell within any recognised exception to the rule that a writ petition ordinarily should not be entertained when an effective alternative statutory remedy is available.

Issues Involved

The principal legal issues before the High Court were:

  1. Whether a writ petition under Article 226 of the Constitution of India was maintainable against an order passed under Section 74 of the GST Act when an appeal was available under Section 107 of the Act.
  2. Whether the alleged denial of a personal hearing constituted a clear violation of the principles of natural justice, thereby bringing the case within a recognised exception to the alternative remedy rule.
  3. Whether the petitioner, having adequately participated in the adjudication proceedings and submitted a detailed reply to the show cause notice, could still contend that it had been denied an adequate opportunity to defend itself.
  4. Whether the absence of a specific case that the petitioner had demanded a personal hearing and was denied such hearing could justify direct interference under Article 226.
  5. Whether the petitioner’s position in its reply to the show cause notice, which according to the Court virtually admitted the mistake resulting in tax evasion, affected the plea of violation of natural justice.
  6. Whether any jurisdictional defect existed when it was not the petitioner’s case that the respondent authority lacked competence to pass the order under Section 74.

Petitioner’s Arguments

The petitioner challenged the impugned Section 74 demand order on multiple grounds, many of which related to the merits of the dispute.

The principal submission concerning maintainability of the writ petition was that:

  • the petitioner had been denied the right of hearing;
  • the mandatory personal hearing was not afforded before passing the impugned order;
  • such denial amounted to a violation of the principles of natural justice;
  • consequently, the matter fell within a recognised exception to the rule of alternative statutory remedy; and
  • the writ petition should therefore be entertained notwithstanding the availability of an appeal under Section 107 of the Act.

The petitioner’s counsel vehemently argued that failure to provide the mandatory personal hearing justified exercise of the High Court’s extraordinary jurisdiction under Article 226.

Respondent’s Arguments / Position Emerging from the Record

The judgment does not record a separate detailed oral submission on behalf of the respondents. Accordingly, no argument beyond the contents of the judgment should be attributed to the respondents.

However, the position emerging from the record and accepted by the Court was that:

  • the petitioner had adequately participated in the proceedings;
  • the petitioner had submitted a detailed reply to the show cause notice;
  • the petitioner had been afforded an adequate opportunity to defend itself;
  • it was not the petitioner’s case that a personal hearing had been specifically demanded and thereafter denied by Respondent No. 2;
  • the documentary material did not establish an ex facie violation of the principles of natural justice; and
  • the impugned order was appealable under Section 107 of the Act.

Court’s Findings

The High Court reiterated that the power under Article 226 of the Constitution of India may be exercised not only for enforcement of fundamental rights but also for other purposes. However, the High Court has discretion to decline interference, particularly where an effective alternative remedy is available.

The Court emphasised that the mere availability of an alternative remedy does not divest the High Court of its powers under Article 226. Nevertheless, ordinarily a writ petition should not be entertained where an efficacious alternative remedy, especially a statutory remedy, exists.

The Court further observed that where a right is created by a statute and the statute itself prescribes the remedy or procedure for enforcing the corresponding right or liability, recourse should ordinarily first be taken to that statutory remedy before invoking the discretionary jurisdiction under Article 226.

The rule requiring exhaustion of statutory remedies was described as a rule of policy, convenience and discretion, subject to recognised exceptions.

Recognised Exceptions to the Alternative Remedy Rule

The High Court identified the following well-known exceptions:

  1. Where the writ petition is filed for enforcement of fundamental rights under Part III of the Constitution.
  2. Where there has been a clear violation of the principles of natural justice.
  3. Where the order or proceedings are wholly without jurisdiction.
  4. Where the vires of legislation is challenged.

The Court stated that this legal position had been succinctly laid down in the Supreme Court decisions in Whirlpool Corporation vs Registrar of Trademarks, Mumbai, (1998) 8 SCC 1 and Harbanslal Sahnia & Anr. vs Indian Oil Corporation Limited, (2003) 2 SCC 107.

Important Clarification

This judgment should be understood with the following important qualifications:

  • The High Court did not adjudicate the merits of the ₹36,00,58,562.16 GST, interest and penalty demand.
  • The writ petition was dismissed primarily because an efficacious statutory appellate remedy was available under Section 107, and the Court found that none of the recognised exceptions to the alternative remedy rule had been established.
  • The judgment does not lay down that the existence of a Section 107 appeal creates an absolute bar to every GST writ petition.
  • On the contrary, the Court expressly recognised that Article 226 jurisdiction remains available in appropriate cases, including cases involving:
    • enforcement of fundamental rights;
    • clear violation of principles of natural justice;
    • proceedings wholly without jurisdiction; or
    • challenge to the vires of legislation.
  • The Court rejected the natural justice plea on the specific facts and documentary record of this case, particularly because the petitioner had participated in the proceedings, submitted a detailed reply, and did not establish that a demanded personal hearing had been denied.
  • The Court’s observation that the petitioner had “virtually admitted” the mistake resulting in evasion of tax arose from its reading of the reply to the show cause notice and documentary evidence on record. This observation must be understood in the context of the Court’s decision on writ maintainability and should not be expanded beyond the terms of the judgment.
  • Since the High Court relegated the petitioner to the statutory appeal under Section 107, the substantive grounds touching the merits of the demand would ordinarily remain matters for consideration in the appropriate statutory proceedings, subject to law.

Sections Involved

·         Section 74 of the Goods and Services Tax Act, 2017 – The impugned demand order for FY 2018-19 was passed under this provision.

·         Section 107 of the Goods and Services Tax Act, 2017 – Provides the statutory appellate remedy which the High Court considered equally efficacious and appropriate for challenging the impugned order.

·         Article 226 of the Constitution of India – The petitioner invoked the extraordinary writ jurisdiction of the High Court.

·         Part III of the Constitution of India – Referred to while identifying enforcement of fundamental rights as one of the recognised exceptions to the rule of alternative remedy.

·         Principles of Natural Justice – The petitioner relied principally on alleged denial of personal hearing to contend that the writ petition fell within an exception to the alternative remedy doctrine.

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