High Court at Calcutta Rules Out Writ Jurisdiction in Disputed GST Assessment Matters: Statutory Remedies Must Be Exhausted - 2025-07-09

Navigating the Tax Maze: Calcutta High Court Refuses Writ Relief in GST Dispute

In a significant ruling for tax practitioners and corporate entities alike, the High Court at Calcutta has underscored the sanctity of statutory appellate processes in Goods and Services Tax (GST) matters. Justice Raja Basu Chowdhury, presiding over Tara Lohia Private Limited v. Additional Commissioner, CGST & CX, Kolkata South Commissionerate & Anr. , dismissed a writ petition that sought to challenge a tax assessment order, affirming that the existence of an alternative remedy under the GST Act is a formidable hurdle for those attempting to bypass the appellate hierarchy.

The Backdrop: A Tug-of-War Over Credits

The dispute arose following an audit observation under Section 65 of the CGST Act, 2017, which culminated in a show-cause notice under Section 74 . The tax authorities raised questions concerning the petitioner's availment of Input Tax Credit (ITC), specifically highlighting potential violations of Section 16(2) of the Act—notably the failure to clear payments to sundry creditors within the mandatory 180-day window.

The petitioner, Tara Lohia Private Limited, argued that the authorities had incorrectly treated ledger balances as outstanding payments and failed to consider their clarifications during the audit process. They sought intervention under Article 226 of the Constitution, claiming the assessment reflected a jurisdictional error.

Contentions from the Bar

Representing the petitioner, counsel argued that the department had failed to conduct a thorough inquiry into bank records and purchase vouchers. The argument centered on the premise that the department had improperly brushed aside their submissions without conducting a meaningful verification, thereby necessitating the court's intervention to prevent injustice.

Conversely, the respondents maintained a firm stance on procedural discipline. They argued that the petitioner failed to discharge the fundamental burden of proof—specifically, providing bank statements to substantiate that payments to creditors were indeed settled within the 180-day period. Consequently, they contended that the writ petition was not maintainable, pointing to the availability of a robust appellate mechanism under Section 107 of the WBGST/CST Act.

Legal Analysis: The Limits of Writ Jurisdiction

Justice Raja Basu Chowdhury observed that the petitioner was essentially contesting an assessment order on the ground of appreciation of evidence rather than a fundamental lack of jurisdictional authority.

Distinguishing the current case from the principles in Raza Textiles Limited v. Income Tax Officer , the Court clarified that while a High Court can intervene if an authority acts without jurisdiction, it cannot assume the role of an appellate body to re-examine disputed questions of fact that could be adequately addressed through statutory appeals.

Key Observations

The judgment highlighted several critical points regarding the burden of proof and the necessity of exhausting administrative remedies:

• On the Burden of Proof: "If during the audit the respondents had failed to notice such documents, it was the obligation and the onus of the petitioner to place such documents before the authorities. The same has not been done."
• On Jurisdictional Limits: "Though, violation of principles of natural justice, and a challenge on jurisdictional issue can be maintained, such issue must, in my view, relate to an exercise of jurisdiction by an authority which it does not have, and not merely an error committed within its jurisdiction."
• On Judicial Restraint: "I am afraid that this Court cannot enter into such disputed questions in an application under Article 226 of the Constitution of India."

The Verdict: A Finality in Procedure

The High Court dismissed the writ petition, effectively barring the petitioner from seeking a "second round" of litigation on the same issues. However, the Court granted the petitioner a four-week window to approach the appellate authority under Section 107 , provided they comply with the necessary legal formalities.

This ruling serves as a stern reminder to taxpayers: when an audit outcome is disputed, the path to relief lies within the established appellate channels defined by statute. The judiciary will not permit the writ jurisdiction of the High Court to be utilized as a substitute for an appeal, especially when the grievance boils down to an evidentiary dispute over which the original authority already holds competent jurisdiction.