GST input tax credit fraud allegations and disputed invoices: writ refused; appeal allowed by 31.01.2026 without time-bar.

In a challenge to a GST order alleging fraudulent availment of ITC, the HC held that writ jurisdiction is ordinarily not exercised in such matters because they involve disputed facts, complex transactions, and voluminous evidence better examined in statutory appeal; the petitioner's reply to the SCN was found vague and non-responsive to the allegations, warranting relegation to the appellate forum. Although the petitioner alleged denial of personal hearing, the HC declined to set aside the order in writ and instead protected the right of appeal by directing that, if an appeal is filed with the requisite pre-deposit by 31.01.2026, it shall not be rejected as time-barred and must be decided on merits.

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1. ISSUES PRESENTED AND CONSIDERED

(i) Whether the Court should exercise writ jurisdiction to set aside the adjudication order alleging fraudulent availment of Input Tax Credit, when the order is appealable and involves disputed facts requiring detailed factual examination.

(ii) Whether the adjudication order was vitiated for breach of principles of natural justice on the ground of non-grant of personal hearing, so as to justify interference in writ jurisdiction.

(iii) Whether, despite lapse of the statutory appeal period, the Petitioners should be granted time to file a statutory appeal on condition of making the requisite pre-deposit, with a direction that the appeal not be rejected as time-barred.

2. ISSUE-WISE DETAILED ANALYSIS

Issue (i): Maintainability of writ petition in fraudulent ITC cases where statutory appeal lies

Legal framework: The Court treated the impugned adjudication order as an appealable order and proceeded on the basis that an appellate remedy is available under the CGST framework. It also applied the settled approach that writ jurisdiction is discretionary and ordinarily not exercised where disputed facts and complex transactions require appreciation of evidence, particularly in matters alleging fraudulent availment of ITC and significant impact on the exchequer.

Interpretation and reasoning: The Court found that the allegations concern a "complex maze of transactions" and would require factual analysis and consideration of evidence not suited for writ adjudication. It emphasised the need to balance the burden on the exchequer and the impact on the GST regime against the Petitioners' interests, which are protected by the statutory appellate process. The Court therefore declined to entertain the writ petitions and held that the proper course is to pursue the statutory appeal.

Conclusion: The Court refused to exercise writ jurisdiction and relegated the Petitioners to the statutory appellate remedy, holding that such matters are ordinarily not to be examined in writ proceedings.

Issue (ii): Alleged denial of personal hearing and violation of natural justice

Legal framework: The Court recognised that personal hearing is "usually" required and examined the natural justice objection in the context of whether it warranted writ interference. It evaluated the record including service of the show cause notice, filing of reply, and the adjudication order's recording of personal hearing opportunities.

Interpretation and reasoning: Although the Department could not trace dispatch proof of hearing notices, the Court declined to disbelieve the adjudication order's recording that multiple personal hearing dates were granted and that the noticees did not appear. The Court noted that the Petitioners were aware of investigation proceedings, the show cause notice was served, and a reply was filed. It also observed that the reply was ambiguous and did not address the allegations on merits. On this overall assessment, the Court held that there was overall compliance with principles of natural justice and that mere inability to produce dispatch proof did not, by itself, establish a denial of hearing warranting writ relief.

Conclusion: The Court did not set aside the order on the ground of denial of personal hearing and held that the natural justice challenge did not justify writ interference.

Issue (iii): Extension of time to file statutory appeal despite limitation having expired

Legal framework: The Court considered that the impugned order had been received earlier and that the writ petitions were filed after the appeal limitation period had lapsed. It nevertheless examined whether an opportunity should be granted to file an appeal, subject to compliance with the pre-deposit requirement.

Interpretation and reasoning: Even though the Petitioners stated difficulty in making the pre-deposit, the Court held they are free to raise all contentions before the Appellate Authority and, given that the appeal period had already expired, granted an opportunity to file the appeal within a specified time. The Court directed that if the appeal is filed with the requisite pre-deposit by the stipulated date, it shall not be dismissed on limitation and shall be adjudicated on merits. The Court also clarified that its observations would not impact adjudication on merits and left all rights and contentions open.

Conclusion: The petitions were disposed of with liberty to file appeal by 31 January 2026 with the mandated pre-deposit, and the appeal was directed not to be rejected as time-barred if so filed, to be decided on merits.

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