Sunny Jagga vs. Union Of INDIA & Anr.

Facts

The petitioners, M/s Sheetal and Sons, Sunny Jagga, and M/s Vikas Traders, filed writ petitions challenging an Order-in-Original dated February 4, 2025. This order was passed pursuant to a show cause notice issued under Sections 74 and 122 of the CGST Act, alleging fraudulent availment of Input Tax Credit (ITC) by several traders through fake invoices without goods supply. The investigation by the DGGI identified five firms involved, with substantial ITC amounts. The petitioners, represented by Mr. Sunny Jagga, are alleged to have issued invoices to certain firms as per the directions of one Mr. Gopal Sharma, who allegedly misled them about the genuineness of these recipient firms. The petitioners claim they were unaware of the firms being fake and that payments were received via RTGS. The impugned order notes that personal hearing notices were issued, but the petitioners or their representatives did not appear, leading to an ex-parte decision.

Held

The Court held that the writ petitions were not maintainable under Article 226 of the Constitution. Citing the Supreme Court's decision in 'The Assistant Commissioner of State Tax & Ors. v. M/s Commercial Steel Limited', the Court reiterated that while an alternative remedy is not an absolute bar, a writ petition should only be entertained in exceptional circumstances, such as a breach of fundamental rights, violation of principles of natural justice, excess of jurisdiction, or a challenge to the vires of a statute. In this case, the Court found no such exceptional circumstances. It noted that the show cause notice and relied upon documents were admittedly served on the petitioner's email address. While the petitioner disputed receiving personal hearing notices, the impugned order recorded that such notices were issued and the petitioners failed to appear. The Court found no reason to disbelieve the Department's assertion regarding the issuance of personal hearing notices. The Court concluded that the allegations of fraudulent ITC availment and the petitioner's statement regarding the delivery of goods to Mr. Gopal Sharma raised factual issues requiring deeper examination of evidence, which is best done by the appellate authority. Therefore, the petitioners were relegated to avail the statutory appellate remedy under Section 107 of the CGST Act.

Key Issues

1. Whether the writ petitions are maintainable under Article 226 of the Constitution, given the existence of an alternative statutory remedy of appeal under Section 107 of the CGST Act? The petitioner argued that the writ petitions are maintainable due to alleged violations of natural justice, specifically the denial of a proper personal hearing. They disputed the claim that personal hearing notices were effectively issued or received. The revenue, represented by the respondents, contended that the show cause notice and relied upon documents were duly served, and personal hearing notices were also issued, as recorded in the impugned order. They argued that the petitioners failed to appear for the personal hearings, thus waiving their right to be heard and rendering the writ jurisdiction unwarranted. The revenue relied on the Supreme Court's decision in 'The Assistant Commissioner of State Tax & Ors. v. M/s Commercial Steel Limited' regarding the maintainability of writ petitions when alternative remedies exist.