Meghalaya High Court
Kenche’S Trace vs Shillong on 4 August, 2026
Author: H.S. Thangkhiew
Bench: H.S. Thangkhiew
2026:MLHC:815-DB
Serial No. 01
Supplementary List
HIGH COURT OF MEGHALAYA
AT SHILLONG
WP(C) No. 264 of 2024
Date of Decision :04.08.2026
M/s City Lights and Equipments,
A Proprietorship firm having its office at
Demseiniong, Polo, Shillong, Meghalaya, PIN-793011
Represented by its Proprietor,
Ms. Meghna Marak,
Residing at Hillview Bungalow,
Kenche's Trace, Shillong 793004
.... Petitioner(s)
Versus
1.State of Meghalaya represented by
Chief Secretary, Shillong
East Khasi Hills District,
Meghalaya, Pin-793001.
2. The Commissioner of Taxes,
Office of the Commissioner of Taxes,
Lachumiere, Shillong, Meghalaya, Pin-793001.
3. Additional Commissioner of Taxes,
Office of the Commissioner of Taxes,
Lachumiere, Shillong, Meghalaya, Pin-793001.
4. The Superintendent of Taxes,
Office of the Superintendent of Taxes, Enforcement Branch,
Shillong, Meghalaya, Pin-793001.
.... Respondent(s)
Page 1 of 13
2026:MLHC:815-DB
________________________________________________________
Coram:
Hon'ble Mr. Justice H.S. Thangkhiew, Judge.
Hon'ble Mr. Justice B. Bhattacharjee, Judge
Appearance:
For the Petitioner(s) : Mr. R.B. Phookan, Sr. Adv. with
Mr. S. Sen, Adv.
Mr. M.U. Ahmed, Adv.
For the Respondent(s) : Mr. N. Syngkon, GA with
Mr. J.N. Rynjah, GA
i) Whether approved for reporting in Yes/No
Law journals etc:
ii) Whether approved for publication Yes/No
in press:
Per. H.S. Thangkhiew, Judge:
JUDGMENT AND ORDER
1. The petitioner a proprietorship firm under the name of M/s City
Lights and Equipments, being aggrieved with demand of
Tax/Interest/Penalty vide order dated 08.02.2021, and order No. CTA-
46/2021/91, dated 26.04.2024 passed by the Additional Commissioner of
Taxes, is before this Court by the instant writ petition.
2. The challenge, is essentially based on the ground that the
demand by the respondents is on the assumption that the notepads containing
the rough estimates seized during an Inspection conducted on 03.06.2020,
Page 2 of 13
2026:MLHC:815-DB
are not mere slips but are memo of sales. Further ground taken is that the
entire proceedings had been initiated at the behest of the Additional
Commissioner, and it was he who had authorized the Superintendent of
Taxes to conduct inspection, which culminated into the impugned demand
and subsequent appeal heard by him.
3. Mr. R.B. Phookan, learned Senior counsel assisted by Mr. S.
Sen, learned counsel for the petitioner submits that after the raid and seizure
of various documents including rough estimates, notepads, estimate books
and cash memos, show cause notices were issued by the respondent No. 4
(Superintendent of Taxes) dated 18.06.2020 and 29.06.2020, alleging tax
evasion. Replies and justifications he submits, were provided by the
petitioner, but the respondent No. 4 on 24.08.2020, issued an intimation of
liability for payment of Rs. 34,26,901.40p as tax plus interest and penalties,
based on the seized records and thereafter a final order of demand amounting
to Rs. 59,18,980/- was issued on 08.02.2021. The learned Senior counsel
submits that though an appeal was filed under Section 107 of the MGST Act,
2017 against the demand, the respondent No. 3, as the Appellate authority
by order dated 26.04.2024, rejected the same.
4. Learned Senior counsel submitted that the petitioner had raised
several specific objections and had provided detailed financial evidence to
Page 3 of 13
2026:MLHC:815-DB
refute the allegations of tax evasion, and also that the notices, had only stated
tax and interest amounts without specifying the exact turnover, on which the
tax was being determined. He further argued that explanation had also been
requested, as to why the authorities applied a flat 18% GST rate while the
majority of items sold by the petitioner’s firm fall within the 5 to 12%
bracket and further that there was no intention to suppress revenue, inasmuch
as, bank deposit details for the financial year 2019-20, had been provided.
The GST returns he submits, also showed that both cash and cashless sales
had been duly accounted for and that the seized rough estimates notepads,
contained mere quotations provided to customers with mostly did not result
in actual sales. Tax invoices he submits, are issued only when a sale is
finalized and that these are the only accurate records of revenue, and further
since most of the goods are purchased from outside the State through
legitimate e-way bills and the system generated stock reports showing no
deficit, there was no possibility of having unaccounted sale revenue.
5. The learned Senior counsel has reiterated that the actual sales
were duly accounted for in the GST returns and tax invoices stored in the
computer system, and therefore linking the quotation from rough notebooks
to actual sales is illegal and not made on a factual basis. He then submitted
that the respondents had failed to adhere to the statutory provisions of
Page 4 of 13
2026:MLHC:815-DB
Section 65 and 66 of the Meghalaya GST Act, 2017, inasmuch as, a huge
penalty has been imposed without conducting a fair assessment or stock
audit, while at the same time ignoring the statutory records provided by the
petitioner, and that based on the authority’s demand the petitioner would
have had to make sales of over 4.74 crores, which is impossible and does not
tally with the opening and closing of stock records.
6. Learned Senior counsel has also advanced an argument that
there has been a violation of the principles of natural justice, inasmuch as,
the respondent No. 3, who had authorized the initial inspection had later
acted as the Appellate authority which rejected the petitioner’s appeal, which
therefore vitiated the proceedings, in spite of the fact that a faceless hearing
for fair adjudication had been requested by the petitioner. It has also been
submitted that the demand total of Rs. 47,05,688/- later increased to over Rs.
59,18,980/- is arbitrary and perverse, as the said amounts had been
demanded without specifying the exact turnover or inspection of actual
stocks.
7. Learned Senior counsel has also contended that when a
controversy involves a purely legal question rather than disputed question of
facts, the High Court could decide the matter even when there is the
availability of alternate remedy. In this context, reliance has been placed on
Page 5 of 13
2026:MLHC:815-DB
the case of Godrej Sara Lee Ltd. vs. Excise and Taxation Officer-cum-
Assessing Authorities & Ors. 2023 SCC OnLine SC 95. Reliance has also
been placed on the case of CBI vs. V.C. Shukla (Jain Hawala case) reported
in (1998) 3 SCC 410 and Principal Commissioner Income Tax, Shillong
vs. M/s NEEPCO (ITA No. 2 of 2024) with regard to entries made in loose
sheets that a hypothetical income recorded in the books of account, should
not be taxed simply because an entry exists. He lastly argued that at the time
of filing of the writ petition, the GST Tribunal was not constituted, but
notwithstanding this aspect, he submits, the jurisdiction of this Court under
Article 226 is not subject to any restriction, and as such the instant matter
can be entertained and appropriate orders passed thereon.
8. On behalf of the State respondents, Mr. N. Syngkon, learned
GA has submitted that there is no question of the writ petition being
entertained, as there is adequate alternative remedy provided under Section
109 MGST Act, 2017. The Central Government he submits, vide notification
dated 31.07.2024, has constituted the Principal Bench of the
Goods and Services Tax Appellate Tribunal (GSTAT) in New Delhi and
State Benches including one in Guwahati, and that vide notification dated
17.09.2025, specific timelines for filing appeals before the GSTAT has been
notified. By this notification he submits, 30.06.2026, has been fixed as the
Page 6 of 13
2026:MLHC:815-DB
final date to file an appeal in cases where the order being appealed against
was communicated before 01.04.2026, and for any other orders
communicated on or after 01.04.2026, the appeal must be filed before the
Appellate Tribunal within 3(three) months from the date the order is
communicated. The learned GA then submits that as per Section 117 of the
MGST Act, an appeal to the High Court would only be permissible if the
matter involves a substantial question of law, while in the instant writ
petition he contends, the dispute is factual and not a legal one. Reference has
been made to the case of Bikram Singh vs. Principal Commissioner Income
Tax (SLP (C) No. 31854/2017, dated 29.08.2023) to emphasize the fact that
writ jurisdiction cannot be used to bypass statutory machinery. He has
further reiterated that no substantial question of law has been raised to
warrant exercise of jurisdiction under Article-226, and reliance has been
placed in the case of Thansingh Nathmal vs. A. Mazid, Superintendent of
Taxes AIR 1964 SC 1419.
9. On the other aspect, it has been argued that the burden of proof
lies on the petitioner to prove that the irregular documents did not translate
into actual sales, inasmuch as, under Rule 56 (10) of the MGST Acts and
Rules, 2017, any records found at the said premises are presumed to be
maintained by the registered person, more so, as it has been claimed by the
Page 7 of 13
2026:MLHC:815-DB
petitioner that the records are mere rough notes. It has also been submitted
that the petitioner has failed to adhere to Section 36 of the MGST Act and
Rules, which mandates that every registered person must keep and maintain
books of accounts for at least 72 months (6 years) from the due date of the
annual return for that year, and therefore the petitioner’s inability to produce
coherent historical records, is also a violation of the established statutory
requirements. It has also been contended that though the petitioner claims
that the tax invoices were maintained electronically, there were not readily
available when requested by the officials and the request made for extension,
was but a stalling tactic and a violation Rule 48 of the MGST Acts and Rules,
2017, which govern the maintenance of electronic records.
10. The learned GA has also alluded to the other contentions raised
by the petitioner and has submitted that the petitioner’s formal reply failed
to address the specific questions raised, such as the discrepancies in the
seized memos and instead, submitted materials which had no connection to
the seized documents. Further it is submitted there is no mention in the
seized cash memos with regard to any GST rates or tax components which
is a direct violation of Section 33 of the MGST Act. With regard to the levy
of 18% rate, he submits that the same was due to the fact that the petitioner
did not specify the tax rate on the memos, and as such they were treated as
Page 8 of 13
2026:MLHC:815-DB
‘goods not specified’, which falls under Entry No. 453 of the notification
dated 29.06.2017, issued by the ERTS Department Government of
Meghalaya. The memos which the petitioner claims to be scribblings, he
submits, in fact clearly recorded full sale transactions including specific
payment methods, such as paid, swipe, cheque and even tracking of old or
previous balance. Further, the learned GA has pointed out other
discrepancies in cash memos, which has failed to satisfy the claims as made
out.
11. On the question of the role of proper officer and enforcement
raised by the petitioner it has been argued that the Superintendent of Taxes
(Respondent No. 4) under Section 61 of the CGST Act, is the Proper Officer
to scrutinize the return and related particulars furnished by a registered
person and to verify the same. In this case he submits, as there was no
satisfactory explanation as to the discrepancies, the proper officer is
authorised to take further action under various Sections of the CGST Act,
such as Section 65, 66, 67, 73 & 74 and that the order of demand issued on
08.02.2021, was a direct consequence of the initial inspection and seizure
conducted on 03.06.2020, under Section 67 of the Act. The petitioner he
submits failed to take any steps to supply any information to explain the
Page 9 of 13
2026:MLHC:815-DB
discrepancies or to rectify the returns as allowed by statute. As such he
submits on all counts, the petitioner’s case is not sustainable in law.
12. Having heard the learned counsel for the parties, this Court notes that
the MGST/CGST Acts, 2017, provide complete self-contained appellate
machinery, under Section 107 before the Appellate authority and thereafter
under Section 109/117 before the GST Appellate Tribunal (GSTAT),
wherein the Principal Seat and Guwahati State Bench, have since been
constituted. It is a well settled principle that when a statute itself creates a
right and provides a special forum for its enforcement, the machinery so
created must ordinarily be resorted to, and recourse be not taken to seek
relief under Article-226. In the case cited by the respondent i.e. Thansingh
Nathmal vs. A. Mazid, Superintendent of Taxes (supra), the Supreme Court
at Para-7, a portion of which is extracted hereinbelow held as follows: –
“7. ……….The jurisdiction of the High Court under Art.
226 of the Constitution is couched in wide terms and the
exercise thereof is not subject to any restrictions except the
territorial restrictions which are expressly provided in the
Article. But the exercise of the jurisdiction is discretionary: it
is not exercised merely because it is lawful to do so. The very
amplitude of the jurisdiction demands that it will ordinarily
be exercised subject to certain self-imposed limitations. Resort
to that jurisdiction is not intended as an alternative remedy
for relief which may be obtained in a suit or other mode
prescribed by statute. Ordinarily the Court will not entertain
a petition for a writ under Art. 226, where the petitioner has
an alternative remedy, which, without being unduly onerous,Page 10 of 13
2026:MLHC:815-DBprovides an equally efficacious remedy. Again the High Court
does not generally enter upon a determination of questions
which demand an elaborate examination of evidence to
establish the right to enforce which the writ is claimed. The
High Court does not therefore act as a court of appeal against
the decision of a court or tribunal, to correct errors of fact,
and does not by assuming jurisdiction under Art. 226 trench
upon an alternative remedy provided by statute for obtaining
relief. Where it is open to the aggrieved petitioner to move
another tribunal, or even itself in another jurisdiction for
obtaining redress in the manner provided by a statute, the
High Court normally will not permit, by entertaining a
petition under Art. 226 of the Constitution, the machinery
created under the statute to be bypassed, and will leave the
party applying to it to seek resort to the machinery so set up.”
13. This Court similarly in the case of M/s Jorabat Shillong
Expressway Ltd., vs. Union of India, 2026 SCC OnLine Megh 423 declined
to entertain the writ petition, wherein the taxpayer had challenged a GST
demand questioning the jurisdiction of the officers concerned and the
classification and taxability of its services on the ground of availability of
alternate remedy when no special grounds on natural justice or jurisdiction
could be made out. In the instant case, the petitioner has not been able to
show any exceptions to warrant exercise of jurisdiction under Article-226 of
the Constitution.
14. The above noted observation has been made in view of the fact
that firstly, the allegation of violation of the principles of natural justice has
Page 11 of 13
2026:MLHC:815-DB
not been established, inasmuch as, the action of the respondent authorities is
as per the statute and authorizing an inspection, is distinct from the
adjudicatory functioning apart from the fact that no materials have been
placed to show any element of bias. Further, the actions of the respondents
being taken by the officers duly empowered as “Proper Officer” under
Section 2(91) read with Section 3 & 5 of the CGST Act, the same cannot be
held to be irregular or illegal. Secondly, the dispute is essentially one of fact
and not law, as the issue raised, is whether the seized notepads and cash
memos represent actual suppressed sales, or were mere estimates that were
not relevant for the purpose of assessment. Added to this is the question as
to whether the goods sold fall within the 5 to 12% slab claimed by the
petitioner or the residuary 18% slab, applied by the respondents and also
whether the bank deposits and GSTR-3B returns, can be reconciled with the
seized materials, which to the mind of this Court require examination and
appreciation of documentary and testimonial evidence.
15. The judgments placed by the learned counsel for the petitioner
i.e. Godrej Sara Lee Ltd. vs. Excise and Taxation Officer-cum-Assessing
Authorities & Ors. (supra), and Principal Commissioner Income Tax,
Shillong vs. M/s NEEPCO (supra) in the circumstances of the instant case
which involves disputed facts and not on a pure question of law are
Page 12 of 13
2026:MLHC:815-DB
distinguishable, and are of no assistance to the case of the petitioner and as
such, are not further elaborated upon.
16. In this view of the matter, as the writ petition does not disclose
any jurisdictional error, denial of natural justice, or that the issue concerned
is a pure question of law, the same is not entertained and stands dismissed,
however by allowing the petitioner to take recourse to alternate remedy for
appeal under Section 109 of the MGST Act. Needless to add, as the writ
petition had been filed when the GSTAT had not been constituted, the delay
if any shall be favourably considered by the Tribunal.
(B. Bhattacharjee) (H.S. Thangkhiew)
JUDGE JUDGE
Meghalaya
04.08.2026
"V. Lyndem- AR-PS"
Signature Not Verified Page 13 of 13
Digitally signed by
VALENTINO LYNDEM
Date: 2026.08.04 16:25:26 IST
