2025 Supreme(Online)(Del) 46394

IN THE HIGH COURT OF DELHI AT NEW DELHI
Prathiba M. Singh, Renu Bhatnagar, JJ
NAVNEET BANSAL – Appellant
Versus
ADDITIONAL COMMISSIONER CGST DELHI NORTH – Respondent
W.P.(C)-4723/2025

In cases involving fraudulent availment of input tax credit, writ jurisdiction under Article 226 should not be exercised when there is an alternative statutory remedy of appeal, especially where the petitioner failed to participate in adjudication and no exceptional circumstances exist.

Headnote:(A) Central Excise Rules, 2002 - Rule 26 - Central Goods and Services Tax Act, 2017 - Section 174 - Constitution of India - Article 226 - Maintainability of writ petition - Alternative statutory remedy - Fraudulent availment of input tax credit - CENVAT credit - Invoice issued without supply - Statement of assessee - Retraction - Principles of natural justice - Supply of relied upon documents - Limitation for filing appeal.

(B) The Supreme Court in The Assistant Commissioner of State Tax & Ors. v. M/s Commercial Steel Limited (Civil Appeal No. 5121/2021) held that existence of an alternative remedy is not an absolute bar to maintainability of a writ petition under Article 226, but a writ petition can be entertained only in exceptional circumstances such as breach of fundamental rights, violation of principles of natural justice, excess of jurisdiction, or challenge to vires of statute. In cases involving fraudulent availment of input tax credit, writ jurisdiction ought not to be exercised ordinarily because such cases involve complex transactions requiring factual analysis and detailed orders after investigation; the burden on the exchequer and impact on GST regime must be balanced against the petitioner’s interest, which is secured by availing the statutory right of appeal. (Paras 11-13, 15-16)

Facts of the case:
The Directorate General of GST Intelligence received intelligence regarding availment of ineligible CENVAT credit through fraudulent invoices for sale of goods. Searches were conducted, and the petitioner’s statement was recorded on 6th January 2021, wherein he admitted to issuing invoices without actual supply of goods and receiving commission. A show cause notice dated 7th May 2021 was issued. The petitioner did not file any reply on merits, did not retract his statement, and only sought copies of relied upon documents. An order-in-original dated 28th November 2024 imposed a penalty of Rs.1,63,36,788/- on the petitioner under Rule 26 of the Central Excise Rules, 2002 read with section 174 of the CGST Act, 2017. The petitioner challenged the order by way of a writ petition, contending that the relied upon documents were not supplied.

Findings of Court:
The court held that the petitioner had full knowledge of the show cause notice, did not file any reply, and did not retract his statement. The impugned order recorded that the petitioner did not appear for personal hearing despite being given opportunities. In cases involving fraudulent availment of input tax credit, writ jurisdiction should not be exercised; the proper remedy is to file a statutory appeal under section 107 of the CGST Act. The court also noted that the writ petition was filed after the limitation period for appeal had expired. However, the court granted the petitioner an opportunity to file an appeal by 31st January 2026, which shall not be dismissed on the ground of limitation and shall be adjudicated on merits. The observations of the court shall not bind the appellate authority.

Issues: The main issues were whether the writ petition under Article 226 is maintainable when an alternative statutory remedy of appeal exists, and whether the failure to supply relied upon documents justified interference in writ jurisdiction.

Ratio Decidendi: The court ruled that in cases involving fraudulent availment of input tax credit (including CENVAT credit), where there is a complex maze of transactions and invoices without supply, writ jurisdiction under Article 226 ought not to be exercised ordinarily. The existence of an alternative remedy, coupled with the petitioner’s failure to participate in adjudication proceedings and the absence of any exceptional circumstances, leads to dismissal of the writ petition. The petitioner is relegated to the statutory remedy of appeal, with the court granting extension of time for filing. Result : Writ petition dismissed. Petitioner permitted to file appeal by 31st January 2026, which shall not be dismissed on ground of limitation and shall be adjudicated on merits. All pending applications disposed of. (Paras 17-20)