Bombay High Court: Writ Petition Against IGST Demand and Limitation Extension Dismissed— “Statutory Remedies Must Be Exhausted First, Notification Can Be Challenged Separately”

Court’s Decision

The Bombay High Court dismissed the writ petition, holding that the petitioner must first exhaust the statutory appellate remedy against the Order-in-Original (O-I-O) dated August 26, 2024. The court observed that while no direct appeal could be filed against the Notification dated December 28, 2023, the petitioner could raise all substantive legal grounds, including IGST applicability on imported goods, in an appeal against the O-I-O.

Further, the court granted the petitioner liberty to challenge the notification separately in the event no relief was secured from the appellate forum. The Appellate Authority was directed to consider the appeal on merits without dismissing it on limitation grounds.

Facts

1. The petitioner challenged two specific actions of the tax authorities:
   • The Order-in-Original (O-I-O) dated August 26, 2024, issued by Respondent No.5, which allegedly imposed Integrated Goods and Services Tax (IGST) on imported goods.
   • The Notification dated December 28, 2023, issued by Respondent No.3, which extended the limitation period for passing final orders for the financial year 2019-2020.
2. The primary contention of the petitioner was that IGST on imported goods was not legally payable under the IGST Act, though it might be payable under the Customs Tariff Act, 1975.
3. The petitioner argued that no appeal was available against the notification, making it necessary to approach the High Court under Article 226 of the Constitution.

Issues

1. Maintainability of the Writ Petition – Whether the writ petition is maintainable despite the availability of an alternate statutory remedy under the tax laws.
2. IGST Applicability – Whether IGST on imported goods is payable under the IGST Act or only under the Customs Tariff Act, 1975.
3. Extension of Limitation Period – Whether the Notification dated December 28, 2023, extending the limitation period, was valid and could be challenged directly through a writ petition.

Petitioner’s Arguments

1. IGST on Imported Goods
   • The O-I-O imposed IGST on imported goods, which the petitioner argued was not legally payable under the IGST Act.
   • The petitioner contended that IGST is not applicable on imported goods under the IGST Act, even though it might be leviable under the Customs Tariff Act, 1975.
2. No Appeal Against the Notification
   • The petitioner submitted that no statutory appeal could be filed against the Notification dated December 28, 2023.
   • Since the notification extended the limitation period, it directly affected the petitioner’s case.
   • The absence of a direct appeal against the notification necessitated High Court intervention.
3. Jurisdiction of the High Court
   • The High Court should exercise its writ jurisdiction under Article 226 since the notification was issued without authority of law.
   • The Appellate Authority may not have the power to set aside the notification, making the High Court’s interference necessary.

Respondent’s Arguments

1. Alternate Remedy Exists
   • The Revenue argued that an effective statutory remedy of appeal existed against the Order-in-Original (O-I-O).
   • The Appellate Authority could adjudicate all legal and factual issues, including the applicability of IGST on imported goods.
2. Notification is Procedural, Not a Demand
   • The notification extending the limitation period was procedural, not a substantive order imposing liability.
   • The petitioner’s actual grievance arose from the O-I-O, not the notification.
3. Writ Jurisdiction Should Not Be Invoked Prematurely
   • The principle of exhaustion of alternate remedies should be followed.
   • The petitioner must first file an appeal before seeking writ jurisdiction.

Analysis of the Law

Doctrine of Alternate Remedy

• The Supreme Court and High Courts have consistently held that a writ petition should not be entertained when an alternative remedy is available.
• Exceptions to this rule apply only in cases where:
  • There is a violation of fundamental rights.
  • The order is without jurisdiction.
  • Principles of natural justice are violated.
  • The matter involves pure questions of law requiring judicial intervention.

Relevance to This Case

• The court noted that the petitioner had an alternative statutory remedy of appeal against the O-I-O.
• The IGST demand and the limitation extension could be raised before the appellate forum.
• The High Court could not interfere when an alternative remedy existed, except in exceptional circumstances.

Precedent Analysis

The court relied on two recent judgments:

1. Oberoi Constructions Limited vs. Union of India & Ors. (Writ Petition (L) No. 33260 of 2023, decided on November 11, 2024)
   • The court had held that writ petitions should not be entertained when statutory appellate remedies are available.
2. Alkem Laboratories Limited vs. Joint Commissioner of CGST & Central Excise (Writ Petition Nos. 3225 & 3287 of 2024, decided on December 10, 2024)
   • The court had rejected similar petitions, directing petitioners to approach the Appellate Authority first.
   • Liberty was granted to challenge notifications separately if no relief was obtained under statutory remedies.

Court’s Reasoning

1. Availability of an Appellate Remedy
   • Since the O-I-O was appealable, the petitioner had a clear statutory remedy.
   • The IGST issue could be adjudicated by the appellate authority.
2. Separate Challenge to Notification
   • The court agreed that no direct appeal lay against the notification.
   • However, it noted that the notification could be challenged later if no relief was secured in the appeal.
3. No Exceptional Circumstances
   • The case did not involve a jurisdictional issue or a violation of natural justice.
   • Hence, the petition was not maintainable.
4. Clarification on Limitation
   • The Appellate Authority was directed to hear the appeal on merits without raising limitation concerns.
   • This was because the petitioner had filed the writ petition within the limitation period.

Conclusion

1. The writ petition was dismissed.
2. The petitioner was directed to file an appeal within four weeks.
3. The Appellate Authority was instructed to hear the appeal on merits, without rejecting it on limitation grounds.
4. The petitioner was granted liberty to challenge the notification separately if no relief was obtained in the appeal.
5. All legal contentions were left open for adjudication in the appeal.

Implications

1. Affirms the Principle of Alternate Remedy
   • The ruling reiterates that writ jurisdiction should not be invoked when an appeal is available.
2. Sets a Precedent for IGST on Imported Goods
   • Clarifies that IGST demands on imports should be contested through statutory forums.
3. Guidance on Challenging Limitation Extensions
   • Taxpayers must first exhaust statutory remedies before directly challenging notifications extending limitation periods.
4. Practical Takeaway for Businesses
   • Taxpayers must prioritize appellate remedies over writ petitions, unless exceptional circumstances exist.

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