Facts of the Case

The Petitioner, M/s Jasmeet Trading Company, filed a writ petition under Article 226 of the Constitution of India challenging an Order-in-Original dated 01.02.2025, issued by the Respondent authority.

The impugned order arose from a Show Cause Notice dated 11.06.2024, alleging that the Petitioner had fraudulently availed Input Tax Credit (ITC) amounting to ₹6,12,530 without actual supply of goods or services.

The Department alleged that such transactions were part of a broader scheme involving fictitious entities to wrongfully claim ITC, thereby causing loss to the exchequer. 

Issues Involved

  1. Whether a writ petition under Article 226 is maintainable when a statutory alternative 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 covering multiple financial years is legally sustainable. 

Petitioner’s Arguments

  • The Petitioner contended that the Show Cause Notice and the impugned order were passed by different authorities, rendering the proceedings invalid.
  • It was argued that a single consolidated SCN covering multiple financial years is impermissible in law.
  • The Petitioner sought relief directly under writ jurisdiction instead of availing appellate remedy. 

Respondent’s Arguments

  • The Respondent contended that the Petitioner had fraudulently availed ITC without actual business transactions, which strikes at the core of the GST regime.
  • It was submitted that the impugned order is appealable under Section 107 of the CGST Act, and hence the writ petition is not maintainable.
  • The case involved serious factual disputes and allegations of fraud, which cannot be adjudicated under writ jurisdiction. 

Court’s Findings / Order

The Delhi High Court dismissed the writ petition and held:

  • Availability of Alternative Remedy:
    The Court reiterated that where a statutory appellate remedy exists under Section 107 CGST Act, writ jurisdiction should not ordinarily be exercised.
  • Reliance on Supreme Court Judgment:
    The Court relied on Assistant Commissioner of State Tax v. Commercial Steel Ltd. and held that writ jurisdiction can be invoked only in exceptional circumstances such as violation of natural justice or lack of jurisdiction.
  • Seriousness of Fraudulent ITC:
    Fraudulent availment of ITC affects the entire GST framework, and such cases require detailed factual examination, which is not suitable for writ proceedings.
  • Proper Forum is Appellate Authority:
    The Court directed that the Petitioner may raise all contentions before the Appellate Authority under Section 107 CGST Act.
  • Outcome:
    The writ petition was disposed of, declining interference.

Important Clarification

  • The Court clarified that observations made in the writ proceedings shall not affect the merits of the case before the appellate authority.
  • The issue of validity of consolidated SCN for multiple years is pending consideration in another case (Quest Infotech Pvt. Ltd. v. Union of India) and may impact future proceedings.

Sections Involved

  • Article 226, Constitution of India
  • Section 107, Central Goods and Services Tax Act, 2017 (Appeal Provision)
  • 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/PMS30052025CW80322025_174204.pdf

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