2025 (9) TMI 1387 - HC - GST

Petition nonmaintainable; appeals permitted against 24 Jan and 1 Feb 2025 orders; pre-deposit Rs13,023,604; file by 15 Nov 2025

The HC held the petition not maintainable and directed the petitioner to seek remedies via appeal, finding the disputed orders involve alleged fictitious ... Maintainability of petition - availability of alternative remedy - Overlap between orders - parallel demands are being raised by DGST, CGST (East) and CGST (North) - passing on of fake and fraudulent ITC - HELD THAT:- In all these impugned orders, there are various third-party firms which are involved which are stated to be fictitious and non-existent who have passed on ITC without actual supply of goods and services. There could be some overlap insofar as the Petitioner is concerned, however, the challenge to the impugned orders would be required to be considered in the respective appeals as the ITC availed is not related only to the Petitioner but to thousands of entities, running into several hundred crores. Under these circumstances, this Court is of the opinion that while there may be overlap, the Petitioner still ought to be relegated to avail of the appellate remedy. Accordingly, it is directed that insofar as the impugned order No. 2 and impugned order No. 3 are concerned, i.e., the impugned orders dated 24th January, 2025 and 1st February, 2025 are concerned, the Petitioner is permitted to challenge these two impugned orders by filing appeals before the Appellate Authority - The pre-deposit shall be made only in respect of demand raised to the tune of Rs. 13,023,604.00/- i.e., demand raised vide impugned order No. 2 Insofar as the appeal challenging impugned order No. 3 is concerned, no pre-deposit shall be liable to be made as the amount is over-lapping with impugned order No. 2. Let the appeals be filed by the Petitioner by 15th November, 2025 with requisite pre-deposit as directed - Petition disposed off. ISSUES PRESENTED AND CONSIDERED 1. Whether writ jurisdiction under Articles 226/227 is maintainable to challenge multiple overlapping GST recovery orders where alternative statutory appellate remedies exist. 2. Whether overlapping demands raised by different GST formations (DGST, CGST East, CGST North) against the same assessee for identical or common ITC entries justify consolidation, interim relief, or circumscription of pre-deposit requirements. 3. Whether pre-deposit obligations under the GST appellate regime should be tailored where demands arising from different orders overlap, and if so, on what basis reductions or exclusions from pre-deposit can be directed. 4. Whether a show-cause notice which duplicates subject-matter of an order already under appeal ought to be proceeded with or stayed against the assessee. ISSUE-WISE DETAILED ANALYSIS Issue 1 - Maintainability of writs in presence of alternative statutory appellate remedy Legal framework: The GST code provides a statutory appellate mechanism to challenge assessment and demand orders, including the requirement of pre-deposit for preferring appeals. Constitutional writ jurisdiction is available but is ordinarily exercised sparingly where efficacious alternative remedies exist. Precedent Treatment: The judgment does not rely upon or overrule specific precedents; the Court applies established principles that where a statutory remedy exists and is efficacious, writ relief will generally be declined. Interpretation and reasoning: The Court noted that the impugned orders arise from a large, multi-entity investigation involving fictitious suppliers and widespread ITC claims affecting thousands of entities and amounting to several hundred crores. Given the complexity and the availability of appellate remedy, the Court held that the Petitioner ought to pursue the statutory appeals rather than obtain extraordinary writ relief. The presence of overlapping investigations did not displace the primacy of the appellate forum. Ratio vs. Obiter: Ratio - Where statutory appellate remedies are available and the subject-matter is part of a broad multi-party investigation, writ relief will be declined and the petitioner relegated to the appellate authority. Obiter - Observations on the scale and multi-entity nature of the fraud contextualize the decision but do not constitute novel legal principle beyond application of established practice. Conclusion: Writ petition as a vehicle to bypass appeals is not entertained; the petitioner is directed to file statutory appeals against the impugned orders (specifically Nos. 2 and 3) before the Appellate Authority. Issue 2 - Treatment of overlapping demands by different GST formations Legal framework: The GST machinery may generate multiple assessments/demands when different formations investigate overlapping chains of transactions; principles of res judicata or bar against multiplicity are not automatic, but the appellate authority must be informed of overlaps to avoid double recovery. Precedent Treatment: No specific precedent was invoked; the Court addressed the overlap by directing the appellate authority to take cognizance of existing demands. Interpretation and reasoning: The Court recognized factual overlaps - identical ITC entries traced to the same suppliers appearing in more than one order. Rather than consolidate proceedings itself, the Court directed that appeals be filed and that the Appellate Authority, when hearing the appeal against one order, be made aware of the fact that an overlapping demand has been raised in respect of the same subject-matter in another order. The multiplicity and scale of implicated entities weighed in favour of directing the statutory appellate process rather than judicial consolidation in writ jurisdiction. Ratio vs. Obiter: Ratio - Overlap between distinct tax orders does not automatically entitle the taxpayer to quash; the remedy is to exhaust appellate process with disclosure of overlaps to the Appellate Authority. Obiter - The Court's directions on how the Appellate Authority should treat overlaps are procedural guidance rather than binding legal doctrine. Conclusion: Overlaps acknowledged; petitioner relegated to appeals and directed to notify the Appellate Authority of overlapping demands so appropriate consideration (including avoidance of double recovery) can be undertaken at the appellate stage. Issue 3 - Pre-deposit tailoring where demands overlap Legal framework: The GST appellate mechanism requires pre-deposit of tax/interest/penalty components to entertain appeals; courts can exercise supervisory power to adjust pre-deposit requirements in fit cases to prevent injustice from overlapping demands. Precedent Treatment: No express precedents referenced. The Court applied equitable tailoring of pre-deposit consistent with supervisory jurisdiction coupled with the statutory appellate framework. Interpretation and reasoning: The Court analyzed the numeric composition of demands in the impugned orders and identified overlapping portions already pre-deposited in respect of one supplier. It directed that pre-deposit be made in respect of the demand raised by impugned order No. 2 (amount specified) but allowed deduction of the sum already pre-deposited for the overlapping component (Ganpati Enterprises). For impugned order No. 3, the Court found the demand overlapped with order No. 2 and therefore no additional pre-deposit was to be made for order No. 3. Ratio vs. Obiter: Ratio - Courts may direct specific, calibrated pre-deposits where overlapping demands exist, including deduction of already paid pre-deposits and waiver of additional pre-deposit for wholly overlapping orders. Obiter - The methodology of calculating overlap is fact-specific; the present direction is limited to the numeric facts before the Court. Conclusion: Pre-deposit directed only for the demand under the principal overlapping order (specified amount) with deduction for amounts already pre-deposited; no fresh pre-deposit required for the overlapping order that duplicates the same demand. Issue 4 - Stay of proceedings on a show-cause notice duplicative of a matter under appeal Legal framework: Administrative action in continuation of proceedings that duplicate matters already sub judice on appeal can be restrained where proceeding would be oppressive or result in double jeopardy in recovery; courts have power to restrain further administrative steps pending appellate adjudication. Precedent Treatment: No authorities cited; the Court applied principles of prevention of multiplicity of proceedings and protection against duplication of recovery. Interpretation and reasoning: The Court observed that the show-cause notice proposing demand for a specified sum in respect of transactions with a particular supplier overlapped with an order already under appeal. To avoid multiplicity and inconsistent action, the Court directed that the show-cause notice not be proceeded with against the petitioner insofar as it duplicates the subject-matter already under appeal. Ratio vs. Obiter: Ratio - Where a show-cause notice duplicates subject-matter already the subject of an appeal, courts may restrain further administrative steps in respect of the same assessee to prevent duplication of proceedings. Obiter - The direction is confined to the facts of overlapping subject-matter and does not purport to be a general bar on independent investigatory steps. Conclusion: The show-cause notice duplicative of the appealable order shall not be proceeded with against the petitioner. Ancillary procedural directions and conclusions 1. The petitioner was given a timeline to file appeals before the Appellate Authority by a specified date with the requisite pre-deposit as directed. 2. The Appellate Authority receiving the appeal against the overlapping order was instructed to take into account the prior demand already raised in respect of the same supplier when adjudicating the appeal. 3. The Court's disposal rests on the application of supervisory principles to ensure appellate remedy is effective, to prevent double recovery where overlapping demands exist, and to calibrate pre-deposit obligations accordingly; these determinations are grounded in the specific factual matrix of multi-entity, high-value ITC investigations and are directed to the procedural management of appeals rather than to any substantive exoneration on merits.