Facts of the Case

The Petitioner, M/s Rohtas Trading Company, filed a writ petition under Article 226 of the Constitution challenging the Order-in-Original dated 01.02.2025, passed by the Respondent authority. The impugned order arose from a Show Cause Notice dated 11.06.2024 alleging fraudulent availment of Input Tax Credit (ITC) amounting to ₹20,19,791.

The Department alleged that the Petitioner, in collusion with other entities, availed ITC without actual supply of goods or services, thereby causing loss to the revenue and undermining the GST framework.

Issues Involved

  1. Whether a writ petition under Article 226 is maintainable when an alternate statutory remedy under Section 107 of the CGST Act, 2017 is available.
  2. Whether the impugned order is invalid on the ground that the Show Cause Notice and adjudication order were passed by different authorities.
  3. Whether issuance of a consolidated Show Cause Notice for multiple financial years is legally sustainable.

Petitioner’s Arguments

  • The Show Cause Notice and the impugned order were issued by different authorities, rendering the proceedings invalid.
  • A consolidated Show Cause Notice covering multiple financial years is impermissible in law.
  • The impugned order is liable to be quashed in writ jurisdiction due to procedural irregularities.

Respondent’s Arguments

  • The writ petition is not maintainable due to the availability of an effective alternate remedy under Section 107 of the CGST Act.
  • The allegations involve fraudulent availment of ITC, requiring detailed factual examination, which cannot be undertaken in writ jurisdiction.
  • The impugned order is appealable, and the Petitioner should approach the appellate authority. 

Court’s Findings / Order

The Delhi High Court dismissed the writ petition, holding that:

  • The availability of an alternate statutory remedy under Section 107 of the CGST Act bars the exercise of writ jurisdiction except in exceptional circumstances.
  • Reliance was placed on Assistant Commissioner of State Tax v. Commercial Steel Ltd. (Supreme Court), which lays down limited exceptions for entertaining writ petitions.
  • No exceptional circumstances such as violation of natural justice, lack of jurisdiction, or breach of fundamental rights were established.
  • Allegations of fraudulent ITC involve complex factual determinations that must be adjudicated by the appellate authority.
  • In cases involving ITC fraud, writ jurisdiction should not ordinarily be exercised due to the serious impact on the GST regime and public exchequer.

Accordingly, the petition was disposed of with liberty to avail the statutory appellate remedy.

Important Clarifications by the Court

  • Writ jurisdiction under Article 226 is extraordinary and discretionary, and should not be used to bypass statutory remedies.
  • Matters involving fraudulent ITC claims require detailed factual analysis, which cannot be undertaken in writ proceedings.
  • Observations made by the Court shall not prejudice the appellate authority in deciding the matter on merits.
  • The issue of consolidated Show Cause Notices for multiple financial years remains pending consideration in another case (Quest Infotech Pvt. Ltd. v. Union of India).

Sections Involved

  • Article 226, Constitution of India
  • Section 107, Central Goods and Services Tax Act, 2017 (Appeal)
  • Section 16, CGST Act (Input Tax Credit)
  • Section 122(1) & 122(3), CGST Act (Penalties – referred contextually)

Link to download the order -  https://delhihighcourt.nic.in/app/showFileJudgment/PMS30052025CW80392025_174302.pdf 

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