Case Law Details
Sodexo India Services Private Limited Vs Union of India & Anr. (Delhi High Court)
The Delhi High Court considered a writ petition challenging an Order-in-Original dated 24.03.2026 passed under Section 74 of the Central Goods and Services Tax Act, 2017, whereby a demand of approximately ₹8.75 crore, together with applicable interest and penalty, was confirmed against the petitioner on eleven issues arising from audit proceedings. The principal component of the demand related to the allegation that the supply of catering services and sale of pre-packaged food products constituted a composite supply liable to GST at 18%.
At the outset, the Court observed that the impugned order was appealable under Section 107 of the CGST Act. It noted that the statutory appellate mechanism empowered the appellate authority to examine questions of fact and law, re-appreciate evidence, scrutinise findings, and determine the legality and correctness of the adjudication. The Court stated that constitutional courts ordinarily exercise restraint where an efficacious statutory appellate remedy is available, although recognised exceptions exist, including breach of fundamental rights, violation of natural justice, excess of jurisdiction, or challenge to the vires of legislation.
The petitioner submitted that the challenge was confined to the decision-making process. It contended that although replies, agreements, invoices, reconciliations and supporting documents had been furnished during the audit and adjudication proceedings, if the adjudicating authority considered the material insufficient, it ought to have called for additional documents or clarifications before determining liability. It was also argued that the replies had not been adequately considered and that the impugned order had been passed mechanically in violation of the principles of natural justice. Reliance was placed on the decisions in Malaysia Airlines Berhad v. Commissioner of Delhi Goods and Services Tax Department of Trade and Taxes & Anr. and Future Generali India Insurance Company Limited v. Goods and Service Tax Officer (GSTO) Ward 203 & Ors.
The respondents opposed the petition, contending that an efficacious statutory remedy under Section 107 of the CGST Act was available. They submitted that the petitioner had been afforded adequate opportunity during the proceedings, had furnished replies along with supporting documents, and that those materials had been considered in the impugned order.
After considering the submissions and the record, the High Court held that no exceptional circumstance existed to justify exercise of writ jurisdiction under Article 226 of the Constitution. The Court noted that the petitioner had actively participated throughout the proceedings by submitting detailed replies to the Audit Memo, Additional Audit Memo and Show Cause Notice, along with agreements, invoices, reconciliations and other documentary material, and had also participated in personal hearings. It therefore found that the petitioner had not been denied an opportunity to present its case or produce supporting material.
The Court rejected the contention that the adjudicating authority was under an obligation to seek further documents before passing the order. It held that once adequate opportunity had been afforded to place all material on record, the adjudicating authority was required to adjudicate on the basis of the available record. Whether the material produced was sufficient, whether additional documents should have been furnished, and whether the conclusions reached were sustainable were matters relating to the merits of the adjudication and fell within the jurisdiction of the appellate authority under Section 107.
On the allegation that the petitioner’s reply had not been properly considered, the Court observed that the impugned order did, in fact, notice the petitioner’s reply. It held that questions regarding adequacy of consideration, appreciation of contentions, or sufficiency of reasons related to the correctness of the adjudication and did not establish violation of the principles of natural justice or any jurisdictional infirmity warranting interference under Article 226.
The Court also held that the petitioner’s reliance on Malaysia Airlines Berhad and Future Generali India Insurance Company Limited was misplaced, observing that those decisions neither examined the maintainability of a writ petition in the face of the statutory appellate remedy under Section 107 nor considered the principles laid down by the Supreme Court in Assistant Commissioner of State Tax and Others v. Commercial Steel Limited.
Accordingly, the High Court held that the case did not fall within any recognised exception to the rule of alternative remedy. The writ petition was dismissed, leaving it open to the petitioner to avail the statutory appellate remedy under Section 107 of the CGST Act. The Court further clarified that, if such an appeal was filed, the period during which the writ petition remained pending would not be reckoned for limitation purposes, and the appellate authority would consider the appeal, including limitation, on its own merits and without being influenced by the observations in the judgment. All pending applications were also closed.
Cases Discussed
- Assistant Commissioner of State Tax and Others v. Commercial Steel Limited (Supreme Court), (2022) 16 SCC 447
- Malaysia Airlines Berhad v. Commissioner of Delhi Goods and Services Tax Department of Trade and Taxes & Anr. (Delhi High Court), 2024 (7) TMI 1383
- Future Generali India Insurance Company Limited v. Goods and Service Tax Officer (GSTO) Ward 203 & Ors. (Delhi High Court), 2024 (5) TMI 1381
FULL TEXT OF THE JUDGMENT/ORDER OF DELHI HIGH COURT
1. At the outset, it deserves notice that the Impugned Order is appealable under Section 107 of the Central Goods and Services Tax Act, 2017 (hereinafter referred to as `CGST Act’). The appellate remedy so provided constitutes a complete, efficacious and comprehensive statutory mechanism for redressal of grievances arising from orders of adjudication. The appellate authority is vested with wide powers to examine both questions of fact and law, re-appreciate the material placed on record, scrutinise the findings returned by the adjudicating authority, and determine the legality as well as the correctness of the order under challenge. It is for this reason that where the legislature has consciously created a specialised adjudicatory framework coupled with a hierarchy of appellate remedies, constitutional courts have consistently exercised restraint in entertaining a challenge to the original adjudication order under Article 226 of the Constitution. Such self-imposed restraint is founded not upon any lack of jurisdiction, but upon sound principles governing the exercise of judicial discretion. Questions involving appreciation of evidence, adequacy of material, correctness of factual findings or errors in the adjudicatory process are, in the ordinary course, matters which the statutory appellate authority is best equipped to examine. Entertaining a writ petition in such circumstances would not only permit a litigant to bypass the legislative scheme but would also render otiose the efficacious appellate remedy consciously provided by the statute.
2. At the same time, it is equally well settled that the existence of an alternative statutory remedy does not operate as an absolute bar to the exercise of writ jurisdiction. In Assistant Commissioner of State Tax and Others v. Commercial Steel Limited1, the Supreme Court reiterated that notwithstanding the availability of an efficacious statutory remedy, the High Court may entertain a petition under Article 226 of the Constitution in exceptional circumstances, namely, where there is: (i) breach of fundamental rights; (ii) violation of the principles of natural justice; (iii) excess of jurisdiction; or (iv) a challenge to the vires of a statute or delegated legislation. The Supreme Court further observed that the mere assertion of one of the aforesaid grounds would not, by itself, justify bypassing the statutory remedy. The High Court is required to independently examine whether the facts of the case disclose circumstances warranting the exercise of its extraordinary jurisdiction notwithstanding the availability of an efficacious appellate remedy.
3. In the backdrop of the aforesaid principles, the question which arises for consideration in the present case is whether the Petitioner has made out a case falling within any of the recognised exceptions so as to justify invocation of the extraordinary jurisdiction of this Court under Article 226 of the Constitution despite the availability of the statutory remedy under Section 107 of the CGST Act.
4. The challenge in the present Petition arises from the Order-in-Original dated 24.03.2026 (hereinafter referred to as ‘Impugned Order’) passed under Section 74 of the CGST Act, whereby a demand of approximately Rs.8.75 crores, together with applicable interest and penalty, has been confirmed against the Petitioner on eleven issues arising out of the audit proceedings. The predominant component of the demand pertains to the allegation that the supply of catering services and sale of pre-packaged food products constituted a composite supply liable to GST at the rate of 18%. The Petitioner had participated in the audit proceedings, submitted replies to the Audit Memo as well as the Additional Audit Memo together with documentary evidence, agreements, invoices and reconciliations, responded to the Show Cause Notice dated 29.09.2025 (hereinafter referred to as `SCN’), and thereafter participated in the personal hearings conducted by the adjudicating authority before the Impugned Order came to be passed.
5. Learned senior counsel representing the Petitioner submits that the challenge is confined to the decision-making process adopted by the adjudicating authority. It is contended that although replies and supporting documents were furnished during the audit as well as adjudication proceedings, the adjudicating authority, if it considered the material insufficient, ought to have called upon the Petitioner to furnish such further documents or clarifications as were considered necessary before proceeding to determine the liability. It is further submitted that the Petitioner’s reply has not been adequately considered and the Impugned Order has been passed mechanically, thereby violating the principles of natural justice. Reliance has been placed upon the decisions of this Court in Malaysia Airlines Berhad v. Commissioner of Delhi Goods and Services Tax Department of Trade and Taxes & Anr.2 and Future Generali India Insurance Company Limited v. Goods and Service Tax Officer (GSTO) Ward 203 & Ors..3
6. Per contra, learned counsel representing the Respondents submits that the present Petition is not maintainable in view of the efficacious statutory remedy available under Section 107 of the CGST Act. It is contended that the Petitioner was afforded adequate opportunity during the proceedings and had furnished replies together with supporting documents, which have duly been considered in the Impugned Order.
7. Having considered the submissions advanced by the learned counsel representing the parties and perused the material placed on record, this Court is of the considered opinion that the present Petition does not disclose any exceptional circumstance warranting exercise of the extraordinary jurisdiction under Article 226 of the Constitution.
8. The principal grievance of the Petitioner is that if the adjudicating authority considered the material placed on record to be insufficient for determining the liability, it ought to have called upon the Petitioner to furnish such further documents or clarifications as were considered necessary instead of proceeding to pass the Impugned Order. The contention does not commend acceptance.
9. The record reveals that the Petitioner actively participated throughout the adjudication proceedings. Detailed replies were furnished not only to the Audit Memo and the Additional Audit Memo but also to the SCN. Along with the replies, the Petitioner placed on record agreements, invoices, reconciliations and other documentary material in support of its defence. Personal hearings were also conducted before the adjudicating authority. It is, therefore, not a case where the Petitioner was denied an opportunity to place its case or produce material in support thereof.
10. The submission advanced on behalf of the Petitioner, in essence, proceeds on the premise that it was incumbent upon the adjudicating authority to seek further documents before concluding the proceedings. Such a proposition, in the opinion of this Court, cannot be accepted as an inflexible requirement of natural justice. Once adequate opportunity has been afforded to a noticee to place all material in support of its case, the adjudicating authority is required to adjudicate on the basis of the record available before it. Whether the material produced was sufficient to substantiate the Petitioner’s case, whether any further documents ought to have been furnished, and whether the conclusions ultimately drawn by the adjudicating authority are sustainable, are all matters touching upon the merits of the adjudication. Such issues are eminently within the province of the statutory appellate authority under Section 107 of the CGST Act.
11. Insofar as the submission regarding non-consideration of the Petitioner’s reply is concerned, the same also does not persuade this Court to entertain the present Petition. A perusal of the Impugned Order demonstrates that the reply submitted by the Petitioner has, in fact, been noticed by the adjudicating authority. Whether the reply has been adequately dealt with, whether each contention raised therein has been correctly appreciated, or whether the reasons recorded by the adjudicating authority are sufficient, are all matters which pertain to the correctness of the adjudication. Such questions neither disclose a violation of the principles of natural justice nor establish any jurisdictional infirmity warranting interference under Article 226 of the Constitution.
12. The reliance placed by the Petitioner upon the decisions of this Court in Malaysia Airlines Berhad (supra) and Future Generali India Insurance Company (supra) is also misplaced. Neither of the aforesaid decisions examines the question of maintainability of a writ petition in the face of the efficacious statutory remedy available under Section 107 of the CGST Act, nor do they consider the principles enunciated by the Supreme Court in Assistant Commissioner of State Tax (supra). The said decisions, therefore, cannot be construed as laying down a proposition that every grievance relating to the appreciation of replies or sufficiency of documents necessarily warrants exercise of writ jurisdiction notwithstanding the availability of an efficacious statutory appeal.
13. Hence, this Court is unable to hold that the present case falls within any of the recognised exceptions to the rule of alternative remedy. The grievance projected by the Petitioner does not establish a manifest violation of the principles of natural justice so as to justify bypassing the statutory appellate mechanism.
14. Consequently, the present Writ Petition is dismissed, leaving it open to the Petitioner to avail the statutory remedy of appeal under Section 107 of the CGST Act, if so advised.
15. It is clarified that, in the event the Petitioner prefers an appeal under Section 107 of the CGST Act, the period during which the present Writ Petition remained pending before this Court shall not be reckoned for the purposes of limitation. The appellate authority shall consider the appeal in accordance with law, including the question of limitation, on its own merits and uninfluenced by any observations contained in the present judgment.
16. All the pending applications stand closed.
Notes:
1 (2022) 16 SCC 447
2 2024 (7) TMI 1383 — Delhi High Court
3 2024 (5) TMI 1381 — Delhi High Court
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