Once GST Appellate Tribunal Is Functional, Parties Must Pursue Statutory Remedy: Madhya Pradesh High Court

The Madhya Pradesh High Court has held that once the Goods and Services Tax Appellate Tribunal (GSTAT) has been constituted and commenced functioning, parties should ordinarily pursue the statutory appellate remedy before the Tribunal rather than invoke the High Court's writ jurisdiction.

A division bench of Justice Vivek Rusia and Justice Pradeep Mittal dismissed a writ petition filed by SNS Minerals Pvt. Ltd. challenging an appellate order that had set aside a GST refund of ₹84.26 lakh granted to the company, while granting it liberty to file an appeal before the GST Appellate Tribunal.

The court observed, “Once the special statutory forum has been established by the government, the High Court should not entertain the petition and relegate the parties to avail the forum, especially constituted to address their grievances.”

The dispute arose from a refund claim of ₹84.26 lakh filed by SNS Minerals, a company engaged in the business of mining and supply of limestone.

The refund claim was initially rejected by the adjudicating authority.

The company's challenge stemmed from a refund claim of about ₹84.27 lakh. After the claim was initially rejected, SNS Minerals succeeded before the appellate authority, which set aside the rejection order on May 20, 2021. Following that decision, the refund was sanctioned and paid to the company.

The matter did not end there. The department subsequently challenged the order sanctioning the refund. On February 17, 2023, the appellate authority allowed the department's appeal and overturned the refund that had already been granted.

Before the High Court, SNS Minerals argued that the appellate authority had, in effect, revisited an issue it had already decided in the company's favour in May 2021. According to the company, that earlier order had attained finality because it was never challenged before a higher forum. It maintained that the refund sanction order was merely a consequence of the earlier appellate decision and could not be used as a route to reopen or undo that decision.

The Court noted that the writ petition had been filed in 2023 when the GST Appellate Tribunal had not been established. It further noted that the petition had been entertained on that basis. However, the Court observed that the GST Appellate Tribunal had since been constituted and had started functioning in Madhya Pradesh.

The Bench held that all legal grounds raised by the petitioner and the grounds raised by the respondents in support of the impugned action could be considered by the GST Appellate Tribunal.

Relying on the Supreme Court's decisions in Whirlpool Corporation v. Registrar of Trade Marks and Radha Krishan Industries v. State of H.P., the Court reiterated that a writ petition would ordinarily not be entertained where an effective alternative remedy is available, except in recognised situations.

The Court held that the petitioner was not alleging violation of principles of natural justice, was not challenging the competency of the authorities to issue the show cause notice or decide the appeal, and was not challenging the constitutional validity of any statute.

The Bench further observed, “Therefore, in the circumstances, the remedy of writ petition cannot be permitted to be availed by passing the statutory remedy of appeal before the GST Appellate Tribunal. Once the GST Appellate Tribunal has been established then the legal objection or grounds under the GST laws raised in this writ petition are liable to be appreciated by the learned Tribunal.”

The court accordingly dismissed the writ petition with liberty to file an appeal before the GST Appellate Tribunal. It further directed that the interim relief available to the petitioner would continue until the application for stay is decided by the Tribunal.