Facts of the Case

M/s Avdesh Printers challenged, before the Punjab and Haryana High Court at Chandigarh, the validity of Section 16(2)(c) of the Central GST Act, 2017 and a penalty imposed under Section 74 along with consequential orders. During hearing, the Court noted that the petitioner had already paid the tax amount, and its grievance was confined solely to the levy of penalty, for which an adequate and efficacious statutory remedy under Section 107 lay before the Appellate Tribunal.

Issues Involved

  1. Whether a writ petition challenging Section 16(2)(c) and a Section 74 penalty should be entertained once the underlying tax has been paid.
  2. Whether the petitioner should instead be relegated to the statutory appellate remedy for the penalty dispute.

Petitioner's Arguments

  • Various submissions were advanced challenging the validity of Section 16(2)(c) of the CGST Act and the penalty imposed under Section 74, seeking interference by the writ court.

Respondent's Arguments

  • The petition ought not to be entertained given the availability of the statutory remedy under Section 107 of the CGST Act, since the petitioner's real grievance concerned only the levy of penalty.

Court Order / Findings

  • The Court observed that the amount of tax had already been paid and the grievance was confined to levy of penalty, for which an adequate and efficacious alternative remedy existed under Section 107.
  • The Court held the appropriate remedy was to approach the Appellate Tribunal, and, without expressing any opinion on merits, disposed of the petition with liberty to avail that remedy, directing that any appeal filed be entertained and considered on merits without raising any limitation objection.

Important Clarification

  • Where the substantive tax liability has been paid and only a penalty dispute survives, writ courts prefer relegating taxpayers to the statutory appellate remedy under Section 107 rather than deciding the vires challenge themselves.
  • Courts frequently protect such relegated appeals from being defeated on limitation, ensuring the taxpayer is not prejudiced by the time spent pursuing the writ remedy.

Sections Involved

  • Section 16(2)(c), CGST Act, 2017 – conditions restricting availment of input tax credit where the supplier has not deposited tax.
  • Section 74, CGST Act, 2017 – penalty and demand provisions for suppression or fraud.
  • Section 107, CGST Act, 2017 – appellate remedy before the Appellate Authority/Appellate Tribunal.

Decision – In Favour of

Disposed of with directions, in part in favour of the assessee: no merits ruling was made, but the petitioner was granted an unhindered, limitation-protected appellate remedy.

Case Details

Court: High Court of Punjab and Haryana at Chandigarh
Case No.: CWP-19746 of 2026
Coram: Hon'ble Mr. Justice Ashwani Kumar Mishra, Acting Chief Justice, and Hon'ble Mr. Justice Rohit Kapoor
Date of Order: 03.07.2026

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