Facts of the Case

  • The Petitioner challenged an adjudication order dated 21.01.2025 raising tax demand.
  • The case involved allegations of fraudulent availment of Input Tax Credit (ITC) through fake firms.
  • Investigation revealed a network of 18 fake entities created for wrongful ITC claims, with 374 beneficiaries, including the Petitioner.
  • The Petitioner contended:
    • No personal hearing was granted.
    • The Show Cause Notice (SCN) was uploaded beyond limitation.
  • The Respondents argued that:
    • The matter involved serious fraud allegations.
    • The impugned order was appealable under Section 107 CGST Act. 

Issues Involved

  1. Whether writ jurisdiction under Article 226 is maintainable despite availability of alternate statutory remedy?
  2. Whether absence of personal hearing constitutes violation of natural justice?
  3. Whether cases involving fraudulent ITC should be adjudicated in writ jurisdiction? 

Petitioner’s Arguments

  • The impugned order was passed without granting personal hearing, violating natural justice.
  • Delay in uploading SCN rendered proceedings invalid.
  • Writ jurisdiction should be exercised due to procedural irregularities. 

Respondent’s Arguments

  • The matter involves complex factual issues and fraudulent ITC transactions requiring detailed examination.
  • The impugned order is appealable under Section 107 CGST Act, hence writ is not maintainable.
  • No exceptional circumstance exists to bypass statutory remedy. 

Court’s Findings / Order

The Delhi High Court disposed of the writ petition with liberty to file an appeal, holding:

1. Alternate Remedy Principle

  • Writ jurisdiction should not be exercised where effective statutory remedy exists.
  • Reliance placed on:
    • Assistant Commissioner of State Tax vs Commercial Steel Ltd. (SC)

2. Fraudulent ITC Cases Require Detailed Examination

  • Cases involving fake ITC involve:
    • Complex transactions
    • Multiple entities
    • Extensive factual analysis
  • Such issues cannot be adjudicated under writ jurisdiction.

3. Protection of GST Regime

  • Misuse of ITC mechanism causes serious impact on government revenue and GST framework.

4. Natural Justice Argument

  • Even if procedural lapses are alleged, such issues can be raised before appellate authority.

5. Relief Granted

  • Petitioner allowed to file appeal under Section 107 CGST Act.
  • Delay condoned if appeal filed by 15 January 2026 with pre-deposit.
  • Writ petition disposed; no merits adjudicated.

 Important Clarifications by the Court

  • Writ jurisdiction under Article 226 is exceptional and discretionary.
  • Fraud-related tax matters should not bypass statutory appellate framework.
  • Courts will discourage forum shopping and multiplicity of proceedings.
  • Alleged violation of natural justice does not automatically justify writ intervention.

Link to download the order - https://delhihighcourt.nic.in/app/showFileJudgment/PMS09122025CW186732025_143755.pdf 

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