2025 (8) TMI 1291 - HC - GST

Writ petition refused; petitioner directed to pursue statutory appeal under Section 107 over alleged fraudulent ITC

Tech Plast Through It Proprietor Prop. Deepmani Jain Versus Commissioner Of Central Goods And Service Tax And Another.

Tech Plast Through It Proprietor Prop. Deepmani Jain Versus Commissioner Of Central Goods And Service Tax And Another. - TMI ISSUES PRESENTED AND CONSIDERED 1. Whether a writ petition under Article 226 is maintainable to challenge a show cause notice and consequential demand order raising alleged fraudulent availment of Input Tax Credit (ITC), when an alternate statutory remedy of appeal exists. 2. Whether factual allegations of large-scale circular or goods-less invoicing and claims of fraudulent ITC (involving numerous noticees and non-existent suppliers) are amenable to adjudication in writ jurisdiction or require exercise of appellate/statutory fact-finding fora. 3. Whether a contention of limitation based on the date of uploading of an order on the GST portal (as distinct from the date of the order itself) can be adjudicated in writ jurisdiction or should be raised in the appellate remedy. 4. Whether, and on what terms, the Court should dispose of the writ petition and direct relegation to the appellate remedy including any directions about pre-deposit and limitation for filing the appeal. ISSUE-WISE DETAILED ANALYSIS Issue 1 - Maintainability of writ when alternate statutory remedy exists Legal framework: The availability of an alternate statutory remedy (appeal under the CGST appellate provisions) ordinarily militates against exercise of extraordinary writ jurisdiction under Article 226, except in recognised exceptional circumstances (breach of fundamental rights, violation of principles of natural justice, excess of jurisdiction, or challenge to vires of statute/delegated legislation). Precedent treatment: The Court follows the established principle that existence of an alternate remedy is not an absolute bar, but writ relief is permissible only in exceptional situations of the kind listed above. Earlier decisions applying that principle (including apex court authority) are applied and followed. Interpretation and reasoning: The Court examined whether any of the recognised exceptions were present. No breach of fundamental rights, no proven violation of natural justice, no excess of jurisdiction, and no vires challenge were demonstrated in the material before it. The impugned action arises from allegations of fraudulent availment of ITC and resulting demand and penalties under the CGST framework-matters for which a statutory appeal remedy exists. Ratio vs. Obiter: Ratio - where an effective alternate statutory remedy exists and none of the narrow exceptions is made out, a writ petition challenging assessment/demand under the CGST enactments should ordinarily be relegated to the statutory appellate process. This is the binding principle applied to dispose of the petition. Conclusion: The writ petition is not maintainable on merits; the petitioner is relegated to pursue the appellate remedy under the statute. Issue 2 - Suitability of writ jurisdiction for adjudicating large-scale fraudulent ITC allegations involving multiple parties and non-existent suppliers Legal framework: Adjudication of ITC admissibility under Section 16(2) and assessment/recovery under Sections 74(1), interest under Section 50 and penalty provisions (including Section 122) requires detailed factual inquiry into chains of transactions, genuineness of supplies, and involvement of multiple entities. Precedent treatment: The Court relies on prior High Court and apex court reasoning that complex factual disputes involving multiple transactions and noticees are not appropriately resolved in writ proceedings and are better suited to the statutory adjudicatory and appellate mechanisms. Interpretation and reasoning: The impugned orders concern alleged goods-less invoices issued by a group of around 20 non-existent firms and ITC passed on to 106 noticees, with the petitioner one among them. The facts involve extensive transactional matrices, identification of sham suppliers, quantification of inadmissible ITC, and imposition of penalties. These are intrinsically fact-intensive and require evidence-based appraisal, cross-examination and technical analysis that the appellate and adjudicatory machinery is designed to undertake; adjudication on merits in writ jurisdiction would amount to premature fact-finding and decide disputed factual questions on the basis of surmises. Ratio vs. Obiter: Ratio - factual controversies of this nature should be resolved through the statutory adjudicatory and appellate fora rather than by writ, unless exceptional circumstances are shown. Obiter - references to the scale of the alleged fraud and number of noticees underline the impracticality of deciding such matters in writ jurisdiction. Conclusion: The Court will not adjudicate the factual merits of the fraudulent ITC allegations in writ jurisdiction and directs that the petitioner pursue its remedy by way of appeal where these factual issues can be appropriately examined. Issue 3 - Limitation: relevance of portal upload date versus date of order and appropriate forum for adjudication Legal framework: Limitation for statutory appeals runs from the operative date prescribed by the relevant GST provisions; technical issues such as portal upload dates may bear on limitation, but their resolution involves factual and legal analysis treatable in appeal proceedings. Precedent treatment: The Court does not decide the limitation question on merits in writ jurisdiction; it leaves open the contention for determination by the appellate authority where documentary evidence and technical logs can be examined. Interpretation and reasoning: The impugned order bears a specific date, whereas the departmental record shows that the DRC-07 was uploaded on the portal at a later date. The department contends the order was issued within limitation and portal delays were technical. Given these competing contentions and the technical/record-driven nature of the question, the Court considers it appropriate that the limitation issue be agitated and decided in the appellate forum where full evidentiary material can be placed. Ratio vs. Obiter: Obiter guiding approach - the petitioner is permitted to raise limitation in the appeal and the Court refrains from adjudicating the point in the writ. Conclusion: Limitation contentions are left open for determination in the appeal; the petitioner is directed to raise them before the appellate authority with supporting documents. Issue 4 - Appropriate disposal and directions regarding filing of appeal, pre-deposit and preservation of rights Legal framework: Statutory appellate remedy permits filing of appeal with specified pre-deposit requirements; courts may grant time and clarify that appeals filed within such time will not be dismissed as barred by limitation if specific directions are warranted. Precedent treatment: Consistent with precedents that relegate litigants to statutory remedies, courts may provide relief by extending time or specifying a date for filing the appeal and clarifying the effect on limitation where fairness warrants. Interpretation and reasoning: Considering the petitioner's challenge and the public interest in efficient resolution of large-scale fraudulent ITC claims, the Court declines to entertain the writ but affords the petitioner a clear timeline to approach the appellate forum. The Court preserves all rights and contentions for adjudication on appeal, and specifies that, if an appeal together with the requisite pre-deposit is filed by the prescribed cut-off date, the appeal shall not be dismissed on the ground of limitation and shall be decided on merits. Ratio vs. Obiter: Ratio - where writ is relegated, the Court may set a reasonable cut-off for filing appeal with pre-deposit and direct that such appeal not be rejected as time-barred, while preserving all substantive defenses for adjudication in the appellate forum. Conclusion: The writ petition is disposed of by relegation to the appellate remedy; the petitioner is directed to file the appeal with requisite pre-deposit by the specified date, with liberty to raise all contentions (including limitation) before the appellate authority; pending applications are disposed of.