Availability of Statutory Appeal Bars Writ Jurisdiction in GST Cases: Delhi High Court

In a firm reaffirmation of the boundaries of judicial intervention, the Delhi High Court has ruled that individuals accused of fraudulent Input Tax Credit (ITC) practices cannot bypass the established statutory appellate process by directly approaching the High Court under Article 226 of the Constitution. The division bench, comprising Justice Prathiba M. Singh and Justice Renu Bhatnagar , emphasized that matters requiring factual analysis of complex financial "mazes" are best left to designated statutory authorities.

The Backdrop: A Maze of Fraudulent Invoices

The controversy stems from investigations conducted by the Directorate General of GST Intelligence (DGGI), which uncovered an intricate web of fraudulent transactions involving the issuance of goods-less invoices to claim ineligible CENVAT credit. The petitioner, Navneet Bansal of M/s Banson Enterprise, was implicated after the search of his premises and subsequent statements revealed that his firm had allegedly raised invoices for commission without any actual supply of PVC resin.

Despite being issued a Show Cause Notice (SCN) in May 2021, the petitioner failed to file a substantive reply or retract his recorded statement regarding the irregular invoicing. The Additional Commissioner, CGST Delhi North, eventually imposed a penalty of over Rs. 1.63 crore, prompting the petitioner to approach the High Court late in the litigation cycle, citing a lack of access to Relied Upon Documents (RUDs).

The Court’s Reasoning: Judicial Restraint in Tax Matters

The High Court observed that the petitioner was fully aware of the SCN but made no meaningful effort to rebut the allegations before the adjudicating authority. Chiefly, the court held that since the GST regime provides a robust mechanism for appeal under Section 107 of the CGST Act, writ jurisdiction should not be treated as a shortcut for parties avoiding the administrative process.

The Court noted that cases involving deep-rooted tax fraud often involve "complex transactions" and "voluminous evidence" that require a level of factual scrutiny unsuitable for the extraordinary jurisdiction of a writ court.

Key Observations

The Court underscored its stance with several critical observations:

• "This Court has consistently taken the view that in cases involving fraudulent availment of ITC, ordinarily, the Court would not be inclined to exercise its writ jurisdiction."
• "The Court, in exercise of its writ jurisdiction, cannot adjudicate upon or ascertain the factual aspects pertaining to what was the role played by the Petitioner, whether the penalty imposed is justified or not..."
• "The persons, who are involved in such transactions, cannot be allowed to try different remedies before different forums, inasmuch as the same would also result in multiplicity of litigation."

Final Verdict: A Path to Appeal

Dismissing the writ petition, the Bench clarified that its refusal to intervene was not a final judgment on the guilt of the petitioner, but a necessary adherence to procedural propriety. However, acknowledging potential delays in the petitioner’s legal proceedings, the Court granted the petitioner a final opportunity to file an appeal under Section 107 of the CGST Act.

If filed by January 31, 2026, the appellate authority has been instructed to consider the appeal on its merits without dismissing it on the grounds of limitation. This ruling reinforces the High Court's commitment to maintaining the integrity of the GST adjudication process while preventing the forum-shopping of unscrupulous litigants.