Facts of the Case

The petitioner, Vaibhav Global Limited, having its registered office at Sitapura, Jaipur, challenged before the High Court of Judicature for Rajasthan, Bench at Jaipur, an order dated 30.10.2023 confirming a demand of IGST amounting to Rs. 3,33,89,976/-, alleged to have been wrongly claimed as refund, along with further directions. The demand arose from a show cause notice issued as far back as 22.03.2022 alleging that the petitioner had claimed refund benefit under Rule 96(10) of the CGST Rules, 2017 to which it was not entitled. The petitioner did not respond to the show cause notice, instead relying on the pendency of an earlier writ petition, D.B. Civil Writ Petition No. 4465/2021, and continuing not to file a reply even after that stay petition was dismissed on 07.08.2023. Despite the absence of a reply, the adjudicating authority passed a detailed, speaking order examining all the issues the petitioner had raised, including its claim of entitlement under Section 54 of the CGST Act, 2017, and rejected that claim.

Issues Involved

  1. Whether the demand of IGST raised on the ground that the petitioner was not entitled to refund under Rule 96(10) of the CGST Rules, while it claimed entitlement under Section 54 of the CGST Act, was sustainable.
  2. Whether the writ petition was maintainable under Article 226 despite the availability of a statutory appellate remedy under Section 107 of the CGST Act against the impugned order.

Petitioner's Arguments

  • The proceedings and the resulting demand were based on a wrong premise; the only basis for the demand was that the petitioner was not entitled to the benefit of Rule 96(10) of the CGST Rules.
  • Under Section 54 of the CGST Act, the petitioner was independently eligible and had rightly claimed the refund, so the action of the respondents was wholly unjust.
  • Reliance was placed on Godrej Sara Lee Ltd. vs The Excise and Taxation Officer-cum-Assessing Authority & Ors., AIR 2023 SC 781, to argue that the writ jurisdiction should nonetheless be invoked.

Respondent's Arguments

  • The show cause notice was issued on 22.03.2022, and the petitioner chose not to respond, instead repeatedly insisting that adjudication be deferred on account of pendency of DBCWP No.4465/2021.
  • Even after the stay petition was dismissed on 07.08.2023, no reply was filed by the petitioner, though the authority nonetheless passed a detailed, speaking order dealing with all issues raised, including the Section 54 entitlement claim, and rejected it.
  • The impugned order was appealable under Section 107 of the CGST Act, and no case was made out for bypassing that alternative remedy; the petition deserved dismissal.

Court Order/Findings

  • The petitioner's entitlement under Section 54 of the CGST Act — which is not even a jurisdictional aspect — already stood examined and negated by the authority in the detailed speaking order dated 30.10.2023.
  • The Court held that no case was made out to invoke its extraordinary writ jurisdiction under Article 226 despite availability of the statutory appeal, on the settled parameters governing such invocation, including as laid down in Godrej Sara Lee Ltd., and accordingly dismissed the writ petition.
  • The petitioner was left open to question the validity of the impugned determination in accordance with law, including by filing an appeal under Section 107 of the CGST Act.

Important Clarification

A taxpayer who chooses not to respond to a show cause notice, even where reasons such as pendency of a related writ are cited, cannot expect a detailed speaking order passed after due consideration of the raised issues to be bypassed via writ jurisdiction; where the demand order already deals with the assessee's Section 54 entitlement on a reasoned basis, courts will ordinarily decline Article 226 interference and relegate the assessee to the statutory appeal under Section 107.

Sections Involved

  • Rule 96(10), CGST Rules, 2017 — restricts refund of IGST paid on exports where the exporter has availed specified benefits on inputs.
  • Section 54, CGST Act, 2017 — general provision governing refund claims under GST.
  • Section 107, CGST Act, 2017 — provides the statutory appellate remedy against orders passed by the adjudicating authority.
  • Article 226, Constitution of India, 1950 — writ jurisdiction, declined to be exercised here in favour of the statutory appeal.

Decision – In Favour of

The writ petition was dismissed, leaving the confirmed IGST demand of Rs. 3,33,89,976/- intact, with the petitioner relegated to the statutory appeal under Section 107. On the facts before the writ court, this outcome favours the Department procedurally, though the Court expressly left the merits of the Rule 96(10)/Section 54 controversy open to be tested in appeal.

Related Case Laws

No directly on-point case notes are currently published on this site.

Case Details

  • Court: High Court of Judicature for Rajasthan, Bench at Jaipur
  • Case No.: D.B. Civil Writ Petition No. 19944/2023
  • CNR: 2023:RJ-JP:41091-DB
  • Coram: Hon'ble Mr. Justice Arun Bhansali and Hon'ble Mr. Justice Narendra Singh Dhaddha
  • Decision Date: 21 December 2023
  • Disposal Nature: Dismissed; petitioner relegated to statutory appeal under Section 107

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