CL International & Anr. Vs Additional Commissioner (Supreme Court of India)
The matter arose from a writ petition filed under Article 226 of the Constitution challenging the Order-in-Original dated 31 January 2025 passed by the Commissioner, Central Tax (Delhi West), as well as a Show Cause Notice dated 2 August 2024. The proceedings were based on intelligence gathered by the Directorate General of Goods and Services Tax Intelligence (DGGI) concerning alleged fraudulent availment of Input Tax Credit (ITC) through bogus transactions and fake invoicing without actual supply of goods.
Read HC Judgment in this case: Delhi High Court Declines Writ in Fake ITC Case Due to Availability of Statutory Appeal
The impugned order alleged that various connected entities, including C.L. Products India Private Limited and others, were non-existent, non-functional, and bogus firms. Scrutiny of registration details and returns led the Department to conclude that the ITC claimed was inadmissible. It was also noted that searches had been conducted during the investigation.
Before the High Court, the petitioner contended that Relied Upon Documents (RUDs) were not provided and non-RUDs were not returned. Although a reply to the Show Cause Notice had been filed and reproduced in the impugned order, it was argued that the Adjudicating Authority had not considered the submissions.
The High Court held that the matter involved detailed factual examination of multiple entities, their promoters, directors, addresses, and interconnections, as well as a complex maze of transactions. Such factual adjudication, particularly in cases involving alleged fraudulent ITC, could not appropriately be undertaken in writ jurisdiction. The Court reiterated its consistent view that in cases concerning fraudulent availment of ITC—where voluminous evidence and detailed investigations are involved—writ jurisdiction should ordinarily not be exercised.
The Court emphasized the significance of ITC under Section 16 of the CGST Act as a key feature of the GST regime meant to facilitate ease of doing business. However, it observed that misuse of ITC through non-existent entities and non-payment of output tax could cause a serious dent in the GST framework and burden the exchequer. In such circumstances, the balance of convenience lies in relegating the petitioner to the statutory appellate remedy.
Reliance was placed on the Supreme Court decision in The Assistant Commissioner of State Tax v. M/s Commercial Steel Limited (Civil Appeal No. 5121/2021), wherein it was held that although the existence of an alternate remedy is not an absolute bar to a writ petition, such jurisdiction should be exercised only in exceptional circumstances—such as breach of fundamental rights, violation of natural justice, excess of jurisdiction, or challenge to vires. In the absence of such exceptions, parties must avail the statutory appellate remedy.
The High Court also referred to its own decisions in similar cases involving alleged fraudulent ITC, reiterating that extraordinary writ jurisdiction ought not to be exercised to examine disputed factual matters, determine the role of parties, or evaluate penalties under Sections 122(1) and 122(3) of the CGST Act. It further observed that permitting parallel remedies before different forums could lead to multiplicity of litigation and contradictory findings.
Accordingly, the High Court declined to entertain the writ petition and granted liberty to the petitioners to file an appeal under Section 107 of the CGST Act. Although the limitation period had lapsed, the Court granted time to file the appeal by 1 February 2026, subject to requisite pre-deposit, directing that such appeal shall not be dismissed on the ground of limitation and shall be adjudicated on merits. All rights and remedies were left open, and any observations made would not affect the appellate adjudication.
The matter was then carried to the Supreme Court by way of Special Leave Petition. After hearing counsel, the Supreme Court found no good ground to interfere with the High Court’s order. However, it was submitted that since the petitioners were prosecuting proceedings before the Supreme Court, they could not file the appeal within the time granted by the High Court.
In view of this request, the Supreme Court extended the time for filing the appeal till 16 March 2026. It directed that if the appeal is filed on or before that date, it shall not be dismissed on the ground of limitation and shall be adjudicated on merits. The Court also reiterated that the appeal must be filed along with the requisite pre-deposit as directed by the High Court. With these observations, the Special Leave Petition and pending applications were disposed of.
FULL TEXT OF THE SUPREME COURT JUDGMENT/ORDER
1. Having heard Mr. Ramakant Gaur, the learned counsel appearing for the petitioners, we find no good ground to interfere with the impugned order passed by the High Court.
2. At this stage, Mr. Ramakant Gaur requests that under the impugned order, time to file appeal was granted upto 1-2-2026 and that since the petitioners were prosecuting the proceedings here, they could not file the appeal by the said date.
3. In view of such prayer, we extend time for filing the appeal till 16-3-2026. If the appeal is filed on or before the said date, it shall not be dismissed on the ground of limitation and shall be adjudicated on merits.
4. Needless to say that as directed by the High Court, the appeal should be filed along with the requisite pre-deposit.
5. With the above observations, the Special Leave Petition is disposed of.
6. Pending applications, if any, also stand disposed of.
