Facts of the Case

M/s. Inam Impex Private Limited, Hyderabad, was assessed for the year 2021-22 by an order-in-original dated 30.12.2025 (with a summary order and attachment in Form GST DRC-07 of the same date) on the allegation that it had availed Input Tax Credit in excess of what its suppliers had declared. The proceedings were initiated under Section 73 of the CGST/SGST/IGST Acts, 2017 without, according to the petitioner, an opportunity of being heard. The petitioner additionally challenged the constitutional validity of Section 16(2)(c) of the CGST/TGST Act, contending that liability was allegedly attributable solely to non-deposit of tax by its supplier despite payment having been made against genuine invoices, rendering the ITC denial arbitrary and violative of Articles 14, 19(1)(g), 21, 265 and 300A of the Constitution.

Issues Involved

  1. Whether the constitutional validity of Section 16(2)(c) of the CGST/TGST Act can be examined in a writ petition where the factual foundation for invoking it is itself disputed.
  2. Whether the show cause notice and impugned order in fact disclosed a case of ITC denial solely for non-deposit of tax by the supplier.
  3. Whether the petitioner should be relegated to the statutory appellate remedy under Section 107 read with Section 107(4) of the CGST/TGST Act.

Petitioner's Arguments

  • The petitioner contended that the invoices raised by its supplier had been duly paid, and ITC was claimed on that basis even though it appeared the supplier had not deposited the corresponding tax.
  • On this footing, it was argued that the ingredients for disallowance under Section 16(2)(c) were made out on the facts, warranting a challenge to the constitutional validity of that provision as applied to a bona fide recipient who had already paid its supplier in full.

Respondent's Arguments

  • The learned Special Government Pleader for State Tax pointed out that there were, in fact, no specific allegations in the show cause notice or findings in the impugned order-in-original that the petitioner had availed ITC without the corresponding tax being deposited by its supplier — the factual premise for the vires challenge was itself absent from the record.

Court Order / Findings

  • On scrutiny of the show cause notice and the order-in-original, the Court found that the proceedings had, in fact, been initiated for the petitioner having availed excess ITC compared to the taxes declared by its supplier — a distinct issue from mere non-deposit of admittedly-paid tax — and it was not evident from the record that the supplier had failed to deposit taxes paid by the petitioner against genuine invoices.
  • The Court held that whether taxes had in fact been paid in lieu of the invoices raised, and after receipt of goods, depended on scrutiny of material documents falling within the domain of the statutory authority, including the appellate authority, and therefore declined to entertain the constitutional challenge to Section 16(2)(c) in the present writ petition.
  • The petitioner was accordingly held at liberty to avail the statutory appellate remedy by making the requisite pre-deposit within the limitation period under Section 107(1) read with sub-section (4), and the writ petition was disposed of without costs.

Important Clarification

  • A constitutional challenge to a substantive GST provision will not be entertained in writ jurisdiction where the factual premise said to attract the provision is itself absent from the show cause notice and impugned order.
  • Disputes over whether ITC was validly availed — including questions of supplier non-compliance, genuineness of invoices and actual tax deposit — are factual matters for the statutory adjudicating and appellate authorities, not for writ courts.
  • Assessees must exhaust the statutory appellate remedy, with the mandatory pre-deposit, before such factual and legal questions can be examined further.

Sections Involved

  • Section 16(2)(c) of the CGST/TGST Act, 2017 – conditions availment of ITC on actual payment of tax charged to the Government by the supplier; its vires was sought to be challenged.
  • Section 73 of the CGST/SGST/IGST Acts, 2017 – the provision under which the excess-ITC demand was raised against the petitioner.
  • Section 107 of the CGST/TGST Act, 2017 – the statutory appeal mechanism to which the petitioner was relegated.

Decision – In Favour of

In favour of the Department on the maintainability of the writ and the vires challenge — the petitioner was relegated to its statutory appeal remedy without any opinion on the merits of the underlying ITC dispute.

Case Details

Court: High Court for the State of Telangana at Hyderabad
Case No.: Writ Petition No. 9234 of 2026
Coram: Hon'ble The Chief Justice Sri Aparesh Kumar Singh and Hon'ble Sri Justice G.M. Mohiuddin
Date of Order: 31.03.2026

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