The Patna High Court addressed a case involving M/s Moral Pharmaceuticals Private Limited, which received a GST show-cause notice for alleged short/non-payment of GST amounting to ₹5.10 crore for the fiscal year 2017-18. The discrepancy was identified through audit data related to the company's GSTR-9C. The adjudicating authority finalized a tax demand of ₹2.91 crore, including CGST and SGST, along with interest and penalties under Section 74.
Read more: Gauhati High Court - ITC cannot be denied to a bona fide purchaser merely because the supplier failed to deposit GST, unless there is evidence of collusion or non-genuine transactions [Order attached]
M/s Moral Pharmaceuticals challenged the order in the High Court, questioning the validity of CBIC circulars, the jurisdiction of the officers, and other procedural issues. The primary issue was whether the High Court should exercise writ jurisdiction to annul the GST demand when an effective statutory appeal remedy was available under the CGST/BGST Acts.
The Court upheld the CBIC circulars, agreeing with the Bombay High Court's view on the authority of Central Tax Officers. It noted that the adjudicating authority had duly considered the company's defense and provided a personal hearing, thus adhering to principles of natural justice. As the order was appealable and the GST law offers a comprehensive mechanism for contesting such orders, the Court found no exceptional circumstances to justify interference.
The High Court declined to reassess the factual material under writ jurisdiction, advising the petitioner to file a statutory appeal within 30 days. It instructed the appellate authority not to dismiss the appeal on limitation grounds due to the writ petition's pendency.
Order Date: 18 September 2026
Parties: M/s Moral Pharmaceuticals Private Limited v. Union of India & Ors.
Facts -
- M/s Moral Pharmaceuticals Private Limited, engaged in the supply of pharmaceutical goods, was issued a GST show-cause notice alleging short/non-payment of GST of ₹5.10 crore for FY 2017-18 due to incorrect declaration of taxable supply value.
- The alleged discrepancy was detected from audit data, particularly relating to turnover and reconciliation in GSTR-9C. The company responded to the notice and participated in the proceedings, explaining the discrepancy in its GSTR-9C.
- The adjudicating authority ultimately confirmed tax of ₹2.91 crore, comprising CGST and SGST of ₹1.4569 crore each, along with applicable interest and an equivalent penalty under Section 74.
- The company challenged the proceedings before the High Court, questioning the validity of CBIC circulars, jurisdiction of the officer, limitation, digital signature, personal hearing and other procedural aspects.
Issue -
- Whether the High Court should exercise writ jurisdiction to quash the GST demand order when the petitioner had an effective statutory remedy of appeal under the CGST/BGST Acts.
Order -
- The Court rejected the challenge to the CBIC circulars, agreeing with the Bombay High Court that the Board had authority to assign functions of “proper officer” to Central Tax Officers. The Court noted that the officers concerned were admittedly Central Tax Officers.
- The Court found that the adjudicating authority had considered the petitioner's defence, documents and submissions and had also provided an opportunity of personal hearing. Therefore, the impugned order could not be treated as having been passed in violation of natural justice.
- The Court observed that the demand order was an appealable order and that the GST law provides a complete mechanism for challenging assessment, penalty and other revenue orders. None of the recognised exceptions warranting interference despite an alternative remedy was found to exist.
- Accordingly, the High Court declined to re-appreciate the factual material in writ jurisdiction and granted the petitioner liberty to file a statutory appeal within 30 days. The Court also directed that the appellate authority should not reject the appeal merely on limitation grounds, considering the pendency of the writ petition.
