M/S R Gupta Metal Store (Through Its Proprietor Sh. Mahesh Chand Gupta) vs. Central Goods And Services Tax Delhi North (Through Its Commissioner)

Facts

The Petitioner, M/s R Gupta Metal Store, filed a writ petition challenging an order dated 4th February, 2025, issued by the Respondent Department, which raised demands against the Petitioner. The case stems from an investigation revealing fake invoice generation by several firms, leading to the identification of 55 bogus supplier firms and the passing of over ₹553 crore as inadmissible Input Tax Credit (ITC) to 5,962 recipient firms. The Petitioner was identified as one of the parties involved. A Show Cause Notice was issued on 3rd August, 2024, and the Petitioner filed a reply on 14th October, 2024. The Petitioner argued that their reply was not properly considered. The Respondent objected to the writ petition's maintainability, citing settled precedents in cases of fraudulent ITC availment and substantial delay.

Held

The Court held that it would not entertain the writ petition. Citing Supreme Court and its own precedents, the Court reiterated that in cases involving fraudulent availment of ITC, which often entail complex factual analysis and voluminous evidence, writ jurisdiction is ordinarily not exercised. The Court emphasized that such matters are best adjudicated through the statutory appellate remedy provided under Section 107 of the CGST Act. The Petitioner's argument that their reply was not considered was noted, but the Court found that the detailed nature of the allegations and the need for factual determination made the writ route inappropriate. The Court granted the Petitioner liberty to file an appeal under Section 107 of the CGST Act by 30th November, 2025, along with the requisite pre-deposit. The appeal, if filed within the stipulated time, would be adjudicated on merits and not be treated as barred by limitation. Any observations made by the Court were not to impact the final adjudication by the appellate authority.

Key Issues

1. Whether the writ petition is maintainable under Article 226 of the Constitution of India, given the allegations of fraudulent availment of Input Tax Credit (ITC) and the existence of a statutory appellate remedy under Section 107 of the CGST Act? Petitioner's Contention: The Petitioner argued that their reply to the Show Cause Notice was not properly considered by the Adjudicating Authority, implying a potential violation of principles of natural justice or an error in the adjudication process that warrants writ intervention. Respondent's Contention: The Respondent contended that writ jurisdiction should not be exercised in cases involving fraudulent ITC availment, as these typically involve complex factual analysis requiring the statutory appellate mechanism. They also raised the issue of delay in filing the appeal, as the impugned order was dated 4th February, 2025.