APPEAL v. WRIT REMEDY – UNDER GST LAWS

InThe Assistant Commissioner of State Tax and Others Versus M/s Commercial Steel Limited - 2021 (9) TMI 480 - Supreme Court the Supreme Court held that a writ petition can be entertained under exceptional circumstances. The respondent, in the present appeal had a statutory remedy under Section 107.  Instead of availing of the remedy, the respondent instituted a petition under Article 226 of the Constitution. Even though the existence of alternate remedy is not an absolute bar to the maintainability of a writ petition under Article 226 of the Constitution, a writ petitioner can be entertained in exceptional circumstances such as-

• a breach of fundamental right;
• a violation of the principles of Natural Justice;
• an excess of jurisdiction; or
• a challenge to the vires of the statute or delegated legislation.

The Supreme Court observed that none of the above exceptions was established in this case.  Therefore, it was not appropriate for the High Court to entertain a writ petition.  The High Court, while doing the exercise proceeded on the basis of surmises.  The Supreme Court allowed the civil appeal filed by the Department.  The Supreme Court directed the respondent to avail the remedies under section 107 of the Act to pursue its grievance. 

In Mukesh Kumar Garg Versus Union Of India & Ors. - 2025 (5) TMI 922 - DELHI HIGH COURT, the High Court held that where the cases involving fraudulent availment of input tax credit, considering the burden on the exchequer and the nature of impact of GST regime, writ jurisdiction ought not to be usually exercised.  The High Court also observed that the allegations against the petitioner are extremely serious in nature.  They reveal the complex maze of the transactions which are alleged to have been carried out between various nonexistence firms for the sake of availing fraudulent input tax credit. 

The input tax credit is meant as an incentive for business who need not pay taxes on the inputs which have already been taxed at the source itself.  This scheme is business friendly and is meant to enable ease of doing business.  The High Court also observed that this facility has been misused by various individuals, firms, entities and companies to avail input tax credit even when the output tax is not deposited or when the entities or individuals who had to deposit the output tax are themselves found to be non-existent.  This would create an enormous dent in the GST regime. 

The High Court observed that in the present case the petitioner and his family members are alleged to have incorporated or floated various firms and businesses only for the purposes of availing input tax credit without there being any supply of goods or services.   

The High Court observed that the impugned order is an appealable order under Section 107 of the Act.  It is settled position that the jurisdiction ought not be exercised by the Court to support the unscrupulous litigants.  The High Court 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, whether the same requires to be reduced proportionately in terms of the invoices raised by the petitioner under his firm.  The High Court further held that the persons, who are involved in such transactions, cannot be allowed to try different remedies before different forums, inasmuch as the same would result in multiplicity of litigation and could also lead to contradictory findings of different forums, tribunals and courts. 

In SS Enterprises Versus Office Of The Commissioner Central Tax Delhi West And Anr. - 2025 (5) TMI 557 - DELHI HIGH COURT, this writ petition has been filed by the petitioner against the order-in-original, dated 31.03.2025 passed by the Additional Commissioner of Central Tax, CGST Delhi West Commissionerate.  A penalty of Rs.36,05,299/- was also imposed on the petitioner.  The petitioner contended that the hearing notice was not received by the petitioner.

The High Court perused the impugned order.  The High Court observed that the petitioner was alleged to have received goods less invoices from two firms.  The petitioner availed total input tax credit to the tune of Rs.172 crores through fake and fraudulent firms and goods less invoices.  The petitioner, in the writ petition, further averred that the Department failed to adhere to the due process of law since no personal hearing was given to it.  The notice for personal hearing dated 09.01.2025 was dispatched by the Department on 17.01.2025.  The same was received by the petitioner on 18.01.2025, late in the evening.  During this period the two hearings fixed on 13.01.2025 and 16.02.2025 were lapsed.  The petitioner was left with only one hearing on 21.02.2025.  Since no opportunity was granted to the petitioner, the petitioner contended that the entire process and impugned order was unfair. 

The High Court observed that the personal hearing notice was received by the petitioner and the petitioner did not avail the hearing.  The petitioner, without availing the hearing opportunity, cannot raise a grievance against the Department.  The impugned order is an appealable order.  The High Court directed the petitioner to file an appeal under Section 107 of the Act before the First Appellate Authority.  The High Court also directed the department to make available to the petitioner all the relied upon documents.  On receipt of the said documents the petitioner is to file appeal before the First Appellate Authority within 30 days.  The High Court directed the First Appellate Authority not to dismiss the appeal on the ground of limitation.

In M/s Rohtas Trading Co. Versus Additional Commissioner, CGST, Delhi North - 2025 (6) TMI 1067 - DELHI HIGH COURT, the petitioner was alleged to have fraudulently availed input tax credit. A show cause notice, dated 11.06.2024, alleging that the petitioner was availed the input tax credit fraudulently to the tune of Rs.20.19 lakhs The Authorities imposed penalties and demanded the tax confirmed.  In the present writ petition, the petitioner contended that show cause notice and impugned order have been passed by different authorities.  The High Court observed that the petitioner, in collusion with other entities had taken substantial benefit of the input tax credit without sale of any goods.  This strikes at the root of input tax credit facility.

The High Court observed that an appeal before the appellate authority was a full-fledged remedy provided under Section 107 of the Act.  The High Court further held that where cases involving fraudulent availment of input tax credit are concerned, considering burden on exchequer and nature of impact on GST Regime, writ jurisdiction ought not to be usually exercised in such cases.