Facts of the Case

M/s Rajesh Metals, through its proprietor Mr. Rajesh Kakar (Petitioner), challenged a Show Cause Notice (SCN) dated 11 July 2024 and the consequent impugned order dated 3 February 2025 passed by the Office of the Commissioner CGST Delhi North (Respondent).

The SCN alleged fraudulent availment of Input Tax Credit (ITC) through transactions with a firm M/s Sun Corporation — claimed to be bogus and non‑existent, and that the goods shown in invoices were paper (goods‑less) transactions designed to wrongly avail ITC.

Despite multiple notices for personal hearing, the Petitioner did not appear, and the Department passed the impugned order raising demands and penalties. 

Issues Involved

  1. Whether a writ petition under Article 226 of the Constitution was maintainable challenging a SCN and order involving allegations of fraudulent availment of ITC when there was an alternate statutory appellate remedy.
  2. Whether the High Court should intervene on merits in a writ petition concerning detailed factual disputes relating to alleged tax fraud.
  3. Whether principles of natural justice were violated, as the Petitioner’s reply to the SCN was not fully considered. 

Petitioner’s Arguments

  • The Petitioner argued the SCN and impugned order were illegal because the Petitioner’s detailed reply was allegedly ignored or inadequately considered by the Respondent before issuance of the order.
  • It was contended that such non‑consideration merited judicial interference under Article 226 of the Constitution. 

Respondent’s Arguments

  • The Department submitted that the allegations involved complex factual matrix and detailed factual disputes — unsuitable for adjudication under writ jurisdiction.
  • It was urged that the Petitioner had a statutory alternative remedy under Section 107 of the Central Goods and Services Tax Act, 2017, for appeal before the appellate authority.
  • Therefore, the writ petition was not competent as the tribunal or appellate forums were available for factual adjudication.

Court Order / Findings

The Delhi High Court held that:

1. Maintainability

  • Extraordinary writ jurisdiction should not ordinarily be exercised where statutory remedies are available.
  • A writ petition challenging a detailed tax order involving complicated facts and accounting issues is normally not maintainable when an alternative remedy under Section 107 of the CGST Act exists.

2. Natural Justice Considerations

  • A mere assertion of non‑consideration of reply does not necessarily amount to violation of natural justice absent clear prejudice.

3. Relieve to File Appellate Remedy

  • The Court permitted the Petitioner to file the appeal before the statutory appellate authority under Section 107 CGST Act within a prescribed period, subject to pre‑deposit and payment of costs of ₹10,000/‑.

This upheld the principle that writ jurisdiction should not substitute an appellate forum where detailed factual and evidence‑based disputes arise. 

Important Clarification in Law

  • Courts should not exercise writ jurisdiction to decide factual or complex tax disputes — appellate remedies must be exhausted first.
  • Maintainability under Article 226 is exceptional, especially in GST matters where investigative norms and statutory appeal routes exist.

Sections Involved

  • Article 226 of the Constitution of India — Writ Jurisdiction
  • Section 16 of the CGST Act, 2017 — Input Tax Credit
  • Section 107 of the CGST Act, 2017 — Appeal to Appellate Authority

Link to download the order - https://delhihighcourt.nic.in/app/showFileJudgment/PMS10102025CW156122025_165550.pdf 

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