Writ Remedy Refused Where GST Appeal Available: Jharkhand High Court’s Approach on Jurisdiction & Natural Justice

Background of the Dispute

In Tata Steel Limited Vs Union of India, the Jharkhand High Court was called upon to decide whether it should exercise its writ jurisdiction under Article 226 of the Constitution against an Order-In-Original dated 26.12.2025, passed under Section 74 of the CGST Act, 2017, or instead require the assessee to pursue the statutory appellate remedy.

The assessee candidly accepted that the CGST law provides a full-fledged appeal mechanism against such orders. Yet it argued that its case fell within the well-recognized exceptions to the “alternate remedy rule”, relying on the principles laid down in Whirlpool Corporation v. Registrar of Trade Marks [(1998) 8 SCC 1].

The two principal planks of the assessee’s challenge were:

  • The very assumption of jurisdiction under Section 74 was alleged to be invalid.
  • The proceedings were claimed to be vitiated by violation of principles of natural justice, particularly around reliance on an audit report and recall from the call book.

The Revenue, on the other hand, maintained that:

  • This was a routine case where statutory appeal is the appropriate course.
  • The Order-In-Original had addressed both jurisdictional issues and merits, and no circumstance existed to justify bypassing the appeal mechanism.

The High Court’s task was therefore limited and focused: not to reappreciate the facts or correctness of the demand, but to determine whether this was one of the rare cases where writ jurisdiction could be invoked despite an effective statutory remedy.

Assessee’s Contentions Before the High Court

1. Alleged Lack of Jurisdiction under Section 74

The assessee argued that the basic jurisdictional preconditions for invoking Section 74 of the CGST Act were not met. Specifically, it was contended that:

  • The three ingredients for Section 74—fraud, willful misstatement, or suppression of facts with intent to evade tax—must coexist in order to invoke extended period proceedings.
  • On the facts of the case, even if the Revenue’s allegations were accepted “on demurrer”, there was no material to attribute:
    • fraud, or
    • willful misstatement, or
    • suppression of facts to evade tax.

The assessee submitted that:

  1. There was no proper or recorded satisfaction of the proper officer on these ingredients.
  2. Consequently, the very initiation of proceedings under Section 74 was said to be without jurisdiction.
  3. As a corollary, the Order-In-Original dated 26.12.2025 passed under this provision was also claimed to be an order passed in excess of jurisdiction.

To reinforce this position, the assessee relied on:

  • ITW Signode India Ltd v. C.C.E. [(2004) 3 SCC 48]
  • Tamil Nadu Housing Board v. C.C.E. [1995 SCC Supp (1) 50]
  • Uniworth Textiles Limited v. C.C.E. [(2013) 9 SCC 753]

These decisions, in the assessee’s reading, established that extended limitation and penal-type provisions like Section 74 can be pressed into service only when the required jurisdictional conditions co-exist and are properly established.

2. Alleged Breach of Natural Justice

The assessee also attacked the proceedings on natural justice grounds, advancing several linked arguments:

  1. The show-cause notice was founded on an audit report whose correctness was itself contested by the Revenue at one stage, yet the notice was issued based on that very report.
  2. The matter had been placed in the call book, and later recalled on the ground that limitation would otherwise set in. The assessee claimed this recall from the call book purely to save limitation was arbitrary and violated fair play and natural justice.
  3. The assessee had raised jurisdictional objections in its reply to the show-cause notice; it alleged that these objections were not duly dealt with in the final order.