Facts of the Case

The petitioners challenged an order-in-original dated 02.02.2025 passed by the GST authorities, whereby demands and penalties were imposed on the petitioner entity, M/s Banson Enterprises.

The case originated from a show cause notice dated 03.08.2024 alleging that:

  • The petitioner issued goods-less invoices to various entities
  • This enabled fraudulent availment of Input Tax Credit (ITC)
  • The alleged wrongful ITC amounted to approximately ₹1.85 crore

The petitioner responded to the SCN and participated in personal hearing proceedings, after which the impugned order was passed. 

Issues Involved

  1. Whether the writ petition under Article 226 is maintainable against an appealable GST order.
  2. Whether the SCN was invalid due to lack of proper authorization under Rule 142.
  3. Whether absence of pre-consultation under Rule 142(1A) vitiates proceedings.
  4. Whether issuance of a consolidated SCN for multiple financial years is legally sustainable.

Petitioner’s Arguments

The petitioner challenged the impugned order on the following grounds:

  • Improper issuance of SCN: The SCN was allegedly issued by an officer not authorized under Rule 142(1)(a).
  • No pre-consultation: Mandatory pre-consultation under Rule 142(1A) was not conducted.
  • Consolidated SCN: A single SCN was issued for multiple financial years, which is under judicial scrutiny in another pending matter. 

Respondent’s Arguments

The department contended that:

  • The impugned order is appealable under Section 107 CGST Act, hence writ is not maintainable.
  • The petitioner had participated in adjudication proceedings, ensuring compliance with principles of natural justice.
  • Statements recorded from the petitioner indicated involvement in issuance of fake invoices, supporting the allegations.
  • Reliance was placed on judicial precedents emphasizing alternate remedy doctrine. 

Court’s Findings / Order

The Delhi High Court held:

  • A writ petition 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:
    • No violation of natural justice was found
    • The petitioner had an effective alternate remedy under Section 107 CGST Act
    • The case involved serious allegations of fraudulent ITC availment, requiring factual adjudication
  • The Court refused to exercise writ jurisdiction and dismissed the petition, directing the petitioner to avail appellate remedy.
  • However, the Court granted:
    • Liberty to file appeal till 15 July 2025
    • Protection against dismissal on limitation if filed within the permitted period 

Important Clarifications

  • Writ jurisdiction should not be used to bypass statutory remedies, especially in GST matters.
  • Cases involving fraudulent ITC require factual determination, which cannot be undertaken under Article 226.
  • The Court emphasized that misuse of ITC provisions affects the integrity of the GST regime.
  • Findings in writ proceedings shall not prejudice appellate adjudication.

Link to download the order - https://delhihighcourt.nic.in/app/showFileJudgment/68915052025CW65032025_103856.pdf 

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