Facts of the Case

M/s. MPM Hotels (MPM Ventures Private Limited), represented by Mr. Girish Mallpani, filed Writ Petition No. 30910 of 2023 before the High Court for the State of Telangana at Hyderabad, challenging an Order-in-Original No. 25/GST/2023-24-Adjn (ADC)-HYD-GST dated 28.07.2023 passed by the Additional Commissioner of Central Tax, Hyderabad GST Commissionerate, and a show-cause notice dated 09.03.2022. The petitioner also sought a declaration that Notification No. 11/2017-CT (Rate), paragraph 2 and Entry 3(i), was ultra vires Sections 7, 9 and 15 of the CGST Act, 2017. The impugned order confirmed a demand of Rs. 1,78,58,096 each under CGST and SGST, with equal penalties under Section 74 and Section 122(1)(xv), plus Rs. 25,000 each under Section 125. The matter was decided on 07.11.2023 by Justice P. Sam Koshy and Justice N. Tukaramji.

Issues Involved

  1. Whether the Order-in-Original dated 28.07.2023 was passed in violation of the principles of natural justice.
  2. Whether the adjudicating authority's appreciation of the statement of the petitioner's Managing Director could be examined by a writ court, or was a question of fact for the statutory appellate authority.
  3. Whether the vires challenge to Notification No. 11/2017-CT (Rate) and the show-cause notice could be entertained in writ jurisdiction despite the availability of a statutory appeal under Section 107.

Petitioner's Arguments

  • The petitioner argued that the impugned order was passed in violation of natural justice, without a fair and reasonable opportunity to defend itself before the adjudicating authority.
  • It contended that the authority had not properly appreciated the statement given by the Managing Director of the petitioner's establishment while confirming the demand.
  • It further argued that paragraph 2 and Entry 3(i) of Notification No. 11/2017-CT (Rate) had no nexus to the subject matter taxed and were ultra vires Sections 7, 9 and 15 of the CGST Act.

Respondent's Arguments

  • The Department relied on paragraph 7 of the impugned order itself, recording that the taxpayer did not file a written reply for over a year and did not attend personal hearings on 18.05.2023, 01.06.2023 and 26.06.2023, with a further opportunity fixed on 18.07.2023 at its own request, none of which was availed.
  • It submitted that the statutory alternative remedy of appeal under Section 107 was available, relying on State of Madhya Pradesh v. Commercial Engineers & Body Building Co. Ltd. to argue a writ court should not entertain a challenge to an assessment order where an appeal exists.

Court Order/Findings

  • The Court held that the finding recorded in paragraph 7 of the impugned order — three personal hearings plus an additional one at the taxpayer's own request, none availed — showed the order was not passed in violation of natural justice.
  • On whether the Managing Director's statement was properly appreciated, the Court held this was a question of fact not amenable to Article 226 scrutiny, particularly where a statutory appeal under Section 107 was available.
  • Relying on State of Madhya Pradesh v. Commercial Engineers & Body Building Co. Ltd., the Court held the writ ought not to be entertained against the assessment order where an effective appellate remedy existed, rejecting the petition solely on that ground.
  • The questions of law raised, including the vires challenge to the rate notification, were expressly left open for the appellate authority; no order as to costs was made.

Important Clarification

Where the impugned order itself records specific dates on which personal hearings were afforded — including an extra one at the taxpayer's own request — a bare assertion of natural justice violation will not persuade a writ court to bypass the statutory appeal under Section 107. Following State of Madhya Pradesh v. Commercial Engineers & Body Building Co. Ltd., writ jurisdiction is not ordinarily exercised against an assessment order where an effective appeal exists, even where the challenge is framed as involving vires of a rate notification.

Sections Involved

  • Sections 7, 9 and 15, Central Goods and Services Tax Act, 2017 – define supply, levy and collection of tax, and valuation of taxable supply, against which Notification No. 11/2017-CT (Rate) was challenged as ultra vires.
  • Section 74, Central Goods and Services Tax Act, 2017 – governs determination of tax not paid or short-paid by reason of fraud or wilful misstatement, under which the demand was confirmed.
  • Section 107, Central Goods and Services Tax Act, 2017 – provides the statutory appellate remedy to which the petitioner was relegated.

Decision – In Favour of

The writ petition was rejected only on the threshold ground of availability of an alternate remedy, with the underlying questions of law and fact expressly left open. Read honestly, this is a decision in favour of the Department at the writ stage — the challenge to the adjudication order was not entertained — but it is not a merits ruling either way, since the petitioner retains full liberty to raise all its grounds, including the vires challenge, before the appellate authority.

Related Case Laws

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

Case Details

  • Court: High Court for the State of Telangana at Hyderabad
  • Case No.: Writ Petition No. 30910 of 2023
  • CNR: Not available on record
  • Coram: Justice P. Sam Koshy and Justice N. Tukaramji
  • Decision Date: 07 November 2023
  • Disposal Nature: Rejected on ground of alternative statutory remedy

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