GST | Allahabad HC: Tax Cases Can’t Be Relegated to Alternate Remedy if Facts Are Uncontested

The Allahabad High Court has ruled that tax cases involving undisputed facts and issues of jurisdiction and breath of natural justice should not be referred to the authorities.

The court stated that cases complying with minimum statutory requirements are usually referred to alternative forums for remedies.

A bench consisting of Justice Saumitra Dayal Singh and Justice Shiv Shanker Prasad made the ruling.

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In light of the undisputed facts mentioned above, downgrading the petitioner to an alternative remedy forum may serve no real intention. The writ court often directs petitioners, especially in tax issues, to pursue the statutory remedy of appeal when minimum legal requirements have been met.

However, when there is a lack of jurisdiction or a breach of fair justice, the writ court is equally prepared to intervene to ensure compliance law by both the taxpayer and the revenue authority.

The petitioner received a show cause notice for the cancellation of their GST registration due to alleged wrongful utilization of input tax credit (ITC) or tax refund. The petitioner argued by saying that a survey carried out by the DGGI in Delhi was underway and their case was still under scrutiny. The issue had not been concluded by the DGGI. The petitioner also mentioned filing a writ petition before the High Court and requested the suspension to be put on hold due to the pending matter.

The registration of the petitioner was retrospectively revoked by the GST Authority starting from the date when the show cause notice was issued.

The Court acknowledged that the decision of revocation lacked proper justification as it did not mention any breach of statutory requirements. The Court also noted that the authority couldn’t provide details regarding the tax invoices, the duration during which the input tax credit was acquired inaccurately, and other relevant information.

The Court held that the vagueness of the petitioner’s response may be inconsequential unless the show cause notice specifically alleged any facts against them.

The Court noted that the revocation of registration has a critical impact on a business entity because it effectively shuts down the business, preventing the issuance of GST tax invoices and hindering the filing of returns.

As a result, the Court concluded the writ petition with a directive that the suspension of the petitioner’s registration should remain in effect for one month. During this period, the respondent authority is instructed to issue a revised show-cause notice for the registration cancellation.