Petition Challenging Rs.56L ITC Demand Dismissed; Appeal Allowed Under Alternative Remedy Rule
The HC held that the petition challenging the demand of Rs.56,26,764/- for fraudulent availment of Input Tax Credit was not maintainable due to the availability of an alternative remedy. Since factual issues required detailed examination, the petitioner was directed to approach the appellate authority. The court noted that some parties had admitted liability and deposited the ITC, while others contested and had orders passed by the Adjudicating Authority. The writ petition was dismissed as unsuitable, and the petitioner was allowed to file an appeal by 31st August 2025, which would be heard on merits without limitation objections.
ISSUES:
Whether the adjudicating authority failed to consider the petitioner's reply and thereby violated principles of natural justice.Whether the impugned order alleging fraudulent availment of Input Tax Credit (ITC) on goods-less invoices is sustainable.Whether the writ petition under Article 226 is maintainable in presence of an alternate statutory remedy under Section 107 of the Central Goods and Services Tax Act, 2017.Whether the absence of the alleged firm at a later date negates its existence at the time of supply and affects the validity of the ITC claim.
RULINGS / HOLDINGS:
The court held that the adjudicating authority did consider the replies of some noticees, including the petitioner, and provided personal hearing opportunities in accordance with the principles of natural justice; thus, there was no violation of natural justice.The allegation of fraudulent availment of ITC on goods-less invoices was supported by evidence including partial deposits by some noticees, strengthening the department's case of "bogus ITC" utilization.The writ petition was not maintainable as the petitioner had an alternate statutory remedy under Section 107 of the CGST Act; the court emphasized that writ petitions under Article 226 are to be entertained only in exceptional circumstances such as breach of fundamental rights, violation of natural justice, excess of jurisdiction, or challenge to the vires of the statute.The court found that the absence of the firm at a later date (2019) does not negate its existence at the time of supply (2018), and thus does not invalidate the supplies or ITC claims made during that period.
RATIONALE:
The court applied the statutory framework of the Central Goods and Services Tax Act, 2017, particularly Section 107 which provides the appellate remedy against orders passed by the adjudicating authority.The court relied on established precedent that the existence of an alternate remedy is not an absolute bar to writ jurisdiction but writs are entertained only in exceptional circumstances including breach of fundamental rights or principles of natural justice.The adjudicating authority's detailed recording of personal hearings and consideration of replies was deemed sufficient compliance with natural justice requirements.The court emphasized the need to consider factual aspects and evidence in the appellate process rather than in writ jurisdiction, thereby reinforcing the doctrine of exhaustion of alternate remedies.
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