FACTS OF THE CASE

  • The Petitioner challenged:
    • Order-in-Original dated 28.11.2024, arising from a Show Cause Notice dated 07.05.2021.
  • The matter originated from an investigation into:
    • Fraudulent availment of CENVAT credit,
    • Issuance of invoices without actual supply of goods (PVC Resin).
  • Searches were conducted and statements recorded, wherein:
    • The Petitioner allegedly admitted involvement in issuing fake invoices and earning commission.
  • A penalty exceeding ₹1.63 crore was imposed under applicable provisions. 

ISSUES INVOLVED

  1. Whether writ jurisdiction under Article 226 is maintainable in cases involving fraudulent availment of CENVAT/ITC.
  2. Whether non-supply of relied-upon documents vitiates adjudication.
  3. Whether the Petitioner can bypass the statutory appellate remedy under Section 107 CGST Act. 

PETITIONER’S ARGUMENTS

  • The Petitioner contended that:
    • Relied-upon documents were not supplied, violating natural justice.
    • The adjudicating authority relied on material from other noticees.
  • It was argued that:
    • The proceedings were procedurally flawed, and
    • The impugned order deserved to be set aside in writ jurisdiction.

RESPONDENT’S ARGUMENTS

  • The Department submitted:
    • The Petitioner was fully aware of proceedings but failed to file reply.
    • The Petitioner’s admission of issuing fake invoices was never retracted.
  • It was argued that:
    • The matter involved serious fraud and factual disputes, and
    • The appropriate remedy lies under Section 107 (Appeal) of the CGST Act. 

COURT’S FINDINGS / ORDER

  • The Delhi High Court held:
    • The Petitioner:
      • Failed to respond to the Show Cause Notice, and
      • Did not participate in adjudication proceedings.
  • The Court observed:
    • Cases involving fraudulent ITC/CENVAT credit require detailed factual examination.
    • Such matters are not suitable for writ jurisdiction.
  • Accordingly:
    • The writ petition was dismissed, and
    • The Petitioner was directed to avail statutory appellate remedy under Section 107 CGST Act. 

IMPORTANT CLARIFICATION BY COURT

  • The Court clarified:
    • Writ jurisdiction should not be exercised in cases involving fraud and disputed facts.
    • The Petitioner was granted liberty to:
      • File an appeal within the prescribed time, and
      • Such appeal shall be decided on merits without limitation objection. 

SECTIONS / LEGAL PROVISIONS INVOLVED

  • Article 226 & 227 – Constitution of India
  • Section 107 – CGST Act, 2017 (Appeal provision)
  • Rule 26 – Central Excise Rules, 2002 (Penalty for fraudulent transactions)
  • Section 174 – CGST Act, 2017 (Repeal & saving clause)

Link to download the order -  https://delhihighcourt.nic.in/app/showFileJudgment/PMS17122025CW47232025_183851.pdf

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