Facts of the Case

The petitioner, M/s. Premier Auto Sales & Service, a partnership firm and an authorised dealer and service centre for Mahindra and Mahindra vehicles with branches at Tirur, Pulikkal, Ponnani, Perinthalmanna and Nilambur, is registered under the CGST Act and the Kerala SGST Act for supply of motor cars, motor vehicles for transport of goods, and parts and accessories. Intelligence gathered by CGST Kozhikode Commissionerate revealed that the petitioner had not filed statutory GSTR-3B returns for May 2018 to January 2019 and had not discharged its GST liability. Following investigation, a show cause notice dated 06.06.2022 demanded Rs. 8,27,93,915/- towards IGST, CGST, SGST and Cess for April 2018 to March 2019 under Section 73(1) of the CGST Act and Kerala SGST Act. The petitioner thereafter filed its GSTR-3B returns and deposited Rs. 8,21,56,286/-. The order dated 24.03.2023 (Ext.P4) nonetheless confirmed the demand and imposed a penalty of Rs. 82,79,392/- under Section 73(9) read with Section 73(11). Instead of filing a statutory appeal under Section 107, the petitioner challenged Ext.P4 directly by way of writ petition.

Issues Involved

  1. Whether the writ court should exercise judicial review over an appealable order under Section 73 of the CGST Act and Kerala SGST Act where no jurisdictional error or violation of natural justice is demonstrated.
  2. Whether the petitioner was afforded a due opportunity of response and hearing before the order was passed.

Petitioner's Arguments

  • The petitioner had cooperated with the proceedings by filing a reply to the show cause notice (Ext.P2) and a Chartered Accountant's detailed argument note (Ext.P3) relying on Circular No.76/50/2018-GST, and had already deposited a substantial part of the tax demanded before the order was passed.
  • Given this cooperation and part-payment, the petitioner urged that the confirmed demand and penalty required reconsideration rather than being enforced as confirmed.

Respondent's Arguments

  • Ext.P4 was passed well within the jurisdiction of the first respondent and after full compliance with the principles of natural justice, since the petitioner was given opportunities to respond to the show cause notice and was heard before the order was made.
  • Ext.P4 was an appealable order under Section 107 of the CGST Act, and the petitioner's proper remedy was to file a statutory appeal rather than invoke the Court's limited writ jurisdiction.

Court Order/Findings

  • The Court reiterated that it does not exercise appellate jurisdiction over a Section 73 order, but only the limited jurisdiction of judicial review, and found that Ext.P4 could not be said to be without jurisdiction or in violation of natural justice, since the petitioner had been afforded opportunities to respond and be heard.
  • Finding no ground to entertain the writ petition, the Court dismissed it, but granted liberty to the petitioner to file a statutory appeal under Section 107, noting that CBIC Notification No.53/23 had extended the limitation for filing such appeals up to 31.01.2024 for assessment years 2017-18 and 2018-19.
  • Any interim order was vacated and pending interlocutory applications were dismissed.

Important Clarification

Where a Section 73 CGST Act order is appealable under Section 107 and the taxpayer cannot show that it was passed without jurisdiction or in breach of natural justice, the High Court will decline to exercise writ jurisdiction on the merits and will relegate the assessee to the statutory appellate remedy. This route becomes more viable where CBIC has, by notification, specifically extended the limitation period for filing such appeals for particular assessment years, as was the position here for 2017-18 and 2018-19.

Sections Involved

  • Section 73, CGST Act & Kerala SGST Act, 2017 — determination of tax not paid or short paid, in cases not involving fraud, and the associated penalty under sub-sections (9) and (11).
  • Section 50, CGST Act, 2017 — interest on delayed payment of tax.
  • Section 20, IGST Act, 2017 — application of CGST Act provisions, including Section 73, to IGST.
  • Section 107, CGST Act, 2017 — appeal to the appellate authority against an adjudication order.

Decision – In Favour of

The decision favours the Department. The writ petition was dismissed, with the Court holding that the Section 73 order was validly passed within jurisdiction and after due compliance with natural justice. The petitioner was, however, given liberty to pursue the statutory appellate remedy, with the benefit of an extended limitation period under CBIC Notification No.53/23.

Related Case Laws

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

Case Details

  • Court: High Court of Kerala at Ernakulam
  • Case No.: WP(C) NO. 13181 OF 2023
  • CNR: Not available
  • Coram: Justice Dinesh Kumar Singh
  • Decision Date: 08.11.2023
  • Disposal Nature: Dismissed with liberty to appeal

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