High Court dismisses writ petition, directing taxpayer to pursue remedy before GST Appellate Tribunal

The Madhya Pradesh High Court dismissed a writ petition filed by SNS Minerals Private Limited, holding that once the Goods and Services Tax Appellate Tribunal (GSTAT) has been constituted and is functional, disputes arising under the GST law should ordinarily be adjudicated through the statutory appellate mechanism. A Division Bench comprising Justice Vivek Rusia and Justice Pradeep Mittal granted liberty to the assessee to pursue its remedy before the GST Appellate Tribunal against the impugned appellate order setting aside a refund of ₹84.26 lakh.

The petitioner, engaged in mining and supply of limestone, had paid GST at 18% on royalty under the reverse charge mechanism during April 2018 to December 2018, while its outward supplies were taxable at 5%. Claiming accumulation of excess input tax, it sought refund under Section 54(3) of the CGST Act. Although the refund claim was initially rejected, the Appellate Authority subsequently allowed the appeal and directed grant of refund. Pursuant to the appellate order, the refund amount of Rs.84.26 lakh was sanctioned and disbursed.

Thereafter, the Department initiated review proceedings and challenged the refund sanction order. The appellate authority ultimately allowed the Department’s appeal and set aside the refund already granted to the petitioner. Aggrieved by this development, the assessee approached the High Court contending that the earlier appellate order had attained finality and could not be indirectly reopened through subsequent proceedings.

Before the High Court, the petitioner argued that the appellate authority had effectively reviewed its own earlier order, which was impermissible in law. It was further submitted that since the Department had never challenged the earlier appellate order before a higher forum, the same had become final and binding. The assessee also contended that parallel recovery proceedings initiated under Section 73 of the CGST Act amounted to an abuse of process.

“Once the special statutory forum has been established by the government, the High Court should not entertain the petition and relegate the parties to avail the forum, especially constituted to address their grievances.”

The Revenue, on the other hand, maintained that the refund sanction order was erroneous and prejudicial to the interests of the Revenue. It argued that the statutory scheme permitted review and challenge of such orders and that the petitioner had been afforded adequate opportunity of hearing throughout the proceedings.

Relying upon the Supreme Court decisions in Whirlpool Corporation v. Registrar of Trade Marks and Radha Krishan Industries v. State of H.P., the Court reiterated that writ jurisdiction should ordinarily not be exercised where an effective statutory remedy exists, except in exceptional circumstances such as violation of natural justice, lack of jurisdiction, enforcement of fundamental rights, or challenge to the vires of a statute.

“When a right is created by a statute, which itself prescribes the remedy or procedure for enforcing the right or liability, resort must be had to that particular statutory remedy before invoking the discretionary remedy under Article 226 of the Constitution.”

Finding that none of the recognized exceptions to the rule of alternate remedy were attracted in the present case, the High Court declined to examine the merits of the dispute. Accordingly, the writ petition was dismissed with liberty to the petitioner to file an appeal before the GST Appellate Tribunal. The Court further directed that the interim protection already operating in favour of the petitioner would continue until the Tribunal decides its stay application.

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