Jammu & Kashmir and Ladakh High Court Holds Writ Petition Not Maintainable Where Effective Statutory Appeal Exists Under GST Act

Background and Context
The petitioner, a proprietorship concern engaged in works contracts and registered under GST, challenged a show cause notice, reminder, and demand order issued by the State Taxes Officer (STO) under Section 73 of the Jammu and Kashmir Goods and Services Tax Act, 2017 (J&K GST Act). The impugned actions pertained to alleged short payment of tax for the financial year 2022-23, following an earlier audit conducted under Section 65 of the Central Goods and Services Tax Act, 2017 (CGST Act). The petitioner approached the High Court under Article 226 of the Constitution, seeking to quash the notices and order, despite the availability of a statutory appeal under Section 107 of the CGST Act.

Arguments and Submissions
The petitioner contended that the demand order was issued in violation of the principles of natural justice, as she was unable to attend the scheduled personal hearings due to being out of station and because the rescheduled date coincided with a public holiday. It was further argued that the STO lacked jurisdiction to initiate proceedings under Section 73 after the completion of audit proceedings under Section 65, and that the petitioner’s request for adjournment was not considered.

Court’s Analysis and Reasoning
The High Court, before delving into the merits, examined the maintainability of the writ petition in light of the statutory remedy of appeal. The Court reiterated the well-settled principle that when a statute provides an effective and efficacious remedy, the High Court would ordinarily not exercise its writ jurisdiction under Article 226. Citing Supreme Court precedents, including Whirlpool Corporation v. Registrar of Trade Marks and Radha Krishan Industries v. State of Himachal Pradesh, the Court outlined the exceptions to the rule of alternative remedy: (i) enforcement of fundamental rights, (ii) violation of natural justice, (iii) orders wholly without jurisdiction, or (iv) challenge to the vires of a statute.

The Court found that the petitioner had been granted adequate opportunity to respond to the show cause notice and to appear for a personal hearing. Despite being given an initial 30 days and a further extension of 13 days, the petitioner failed to submit a reply or attend the hearing. The Court held that the ground of violation of natural justice was unsubstantiated.

On the issue of jurisdiction, the Court clarified that Section 65(7) of the CGST Act expressly empowers the proper officer to initiate proceedings under Sections 73 or 74 if the audit reveals unpaid or short-paid tax. The Court rejected the argument that the STO lacked jurisdiction to proceed under Section 73 after the audit, finding it contrary to the statutory scheme.

Conclusion and Decision
Concluding that none of the recognized exceptions to the rule of alternative remedy were established, the High Court dismissed the writ petition as not maintainable. The petitioner was granted liberty to pursue the statutory appeal under Section 107 of the CGST/J&K GST Act. The Court clarified that its observations were confined to the issue of maintainability and would not prejudice the petitioner’s case before the appellate authority.