Facts of the Case

The petitioner, M/s Mahavir Metal House, filed a writ petition under Article 226 challenging an Order-in-Original dated 01.02.2025 passed by the Additional Commissioner, CGST, Delhi North.

The impugned order arose from a Show Cause Notice dated 11.06.2024, wherein allegations were made that the petitioner had fraudulently availed Input Tax Credit (ITC) amounting to ₹2,38,062/-. The department alleged that such ITC was availed without actual supply of goods or services, thereby resulting in wrongful benefit.

The impugned order imposed demands and penalties against the petitioner.

Issues Involved

  1. Whether a writ petition under Article 226 is maintainable when a statutory appellate remedy under Section 107 CGST Act is available.
  2. Whether the impugned order is vitiated because:
    • The Show Cause Notice and final order were passed by different authorities.
    • A consolidated Show Cause Notice was issued for multiple financial years. 

Petitioner’s Arguments

  • The petitioner contended that the SCN and the impugned order were issued by different authorities, rendering the proceedings invalid.
  • It was further argued that a single consolidated SCN for multiple financial years is legally unsustainable.
  • The petitioner sought invocation of writ jurisdiction due to alleged procedural irregularities. 

Respondent’s Arguments

  • The department alleged fraudulent availment of ITC in collusion with other entities, without actual supply of goods or services.
  • It was argued that the matter involves serious factual disputes and financial implications, which must be adjudicated by the appellate authority.
  • The respondent emphasized that an effective alternative remedy under Section 107 CGST Act is available.

Court’s Findings / Order

The Delhi High Court refused to entertain the writ petition and held:

  • A writ petition under Article 226 is maintainable only in exceptional circumstances, such as:
    • Violation of fundamental rights
    • Breach of natural justice
    • Lack of jurisdiction
    • Challenge to vires of statute
  • In the present case, none of these exceptional grounds were established.
  • The Court relied on the Supreme Court judgment in Assistant Commissioner of State Tax v. Commercial Steel Ltd. holding that:
    • Availability of an alternative statutory remedy should ordinarily bar writ jurisdiction.
  • The Court observed that:
    • Allegations of fraudulent ITC involve complex factual examination, not suitable for writ jurisdiction.
    • The appellate authority under Section 107 provides a complete and efficacious remedy.
  • The Court also reiterated its earlier view that:
    • Writ jurisdiction should not be exercised in cases involving fraudulent ITC claims, given their impact on the GST regime.
  • Accordingly, the petition was disposed of, granting liberty to the petitioner to avail statutory remedies. 

Important Clarifications by the Court

  • Observations made in the order shall not affect the merits of the case before the appellate authority.
  • The issue regarding consolidated SCN for multiple financial years is pending consideration in another case and may govern future proceedings.
  • The Court emphasized that factual disputes must be adjudicated by appellate forums, not in writ jurisdiction.

Link to download the order -  https://delhihighcourt.nic.in/app/showFileJudgment/PMS30052025CW82802025_174424.pdf

Disclaimer

This content is shared strictly for general information and knowledge purposes only. Readers should independently verify the information from reliable sources. It is not intended to provide legal, professional, or advisory guidance. The author and the organisation disclaim all liability arising from the use of this content. The material has been prepared with the assistance of AI tools.