THE ASSISTANT COMMISSIONER OF STATE TAX vs. M/S COMMERCIAL STEEL COMPANY

C.A. No.-005121-005121 - 2021Supreme Court2021 INSC 44103 September 2021Bench: HON'BLE THE CHIEF JUSTICE HON'BLE MR. JUSTICE VIKRAM NATH HON'BLE MS. JUSTICE HIMA KOHLI9 pages
For Petitioner: VENKAT PALWAI LAW ASSOCIATES
AI SummaryAllowed

What were the facts?

The Assistant Commissioner of State Tax (appellant) challenged a High Court judgment that set aside the collection of Rs 4,16,447 towards tax and penalty from M/s Commercial Steel Limited (respondent) under the CGST and SGST Acts. The respondent, engaged in iron and steel business, purchased goods from JSW Steel Limited, Karnataka, under a tax invoice dated 11 December 2019. The consignment was intercepted on 12 December 2019 in Telangana. The revenue alleged that the respondent was attempting to sell goods in the local market evading SGST and CGST, based on the route taken. The respondent paid the tax and penalty, and the goods were released on 13 December 2019. The respondent then filed a writ petition challenging the detention and notice, seeking a refund.

What did the Supreme Court hold?

The Supreme Court held that the High Court erred in entertaining the writ petition under Article 226 of the Constitution. The existence of an alternative remedy under Section 107 of the CGST Act is not an absolute bar, but a writ petition can only be entertained in exceptional circumstances such as a breach of fundamental rights, violation of principles of natural justice, excess of jurisdiction, or a challenge to the vires of a statute. In this case, none of these exceptions were established. A notice was served on the person in charge of the conveyance, indicating no violation of natural justice. The assessment of facts would have to be carried out by the appellate authority, and the High Court had proceeded on surmises. Therefore, the appeal was allowed, the High Court's order was set aside, and the writ petition was dismissed. However, the respondent was permitted to pursue the alternate statutory remedy under Section 107 of the CGST Act.

What were the issues?

1. Whether the High Court erred in entertaining a writ petition under Article 226 of the Constitution, given the existence of a statutory alternative remedy under Section 107 of the CGST Act? (Question of law) Assessee's Contention: The High Court, having entertained the writ petition, was justified on merits in setting aside the detention and the order for collection of tax and penalty under duress. No interference by the Supreme Court is warranted. Revenue's Contention: The High Court was in error in entertaining the writ petition under Article 226, as the statutory alternative remedy under Section 107 of the CGST Act was available. None of the exceptions to the rule of alternative remedy apply in this case, and the High Court ought not to have entertained the writ petition. On merits, the High Court proceeded on the basis of surmises.

Which sections of the Income-tax Act were involved?

Section 107,Section 20,Section 129,Section 73,Section 74

AI-generated summary — verify with the full judgment below

Cause title — parties, addresses and appearances
CA 5121/2021 1 Reportable IN THE SUPREME COURT OF INDIA CIVIL APPELLATE JURISDICTION Civil Appeal No 5121 of 2021 (Arising out of SLP (C) No 13639 of 2021 @ D No.11555 of 2020) The Assistant Commissioner of State Tax Appellant(s) and Others Versus M/s Commercial Steel Limited Respondent(s)

J U D G M E N T Per Dr Dhananjaya Y Chandrachud 1 Leave granted. 2 This appeal arises from a judgment of a Division Bench of the High Court of Telangana dated 4 March 2020. 3 The High Court in the exercise of its writ juri iction under Article 226 of the Constitution set aside the action of the appellants in collecting an amount of Rs 4,16,447 from the respondent towards tax and penalty under the Central Goods and Services Tax Act 2017 (CGST) and State Goods and Services Tax Act (SGST) and directed a refund together with interest at the rate of 6% per annum from 13 December 2019. A further direction has been issued to the State of Telangana to consider initiating disciplinary proceedings against the CA 5121/2021 2 Assistant Commissioner. Costs of Rs 25,000 have been imposed on the first appellant, w

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