Devender Singh Vs Additional Commissioner (Delhi High Court)
Delhi High Court dismissed a writ petition challenging an adjudication order passed under the Central Goods and Services Tax (CGST) Act, 2017, on allegations of fraudulent availment of Input Tax Credit (ITC). The petitioner had approached the Court under Article 226, asserting violation of natural justice, improper rejection of the request for cross-examination, lack of jurisdiction of the proper officer, and procedural irregularities. The Court declined to exercise its writ jurisdiction and held that the statutory appellate remedy under Section 107 of the CGST Act must be pursued instead.
The petitioner contended that the adjudicating authority had relied on statements of various individuals without permitting cross-examination, thereby violating principles of natural justice. It was argued that the denial of cross-examination rendered the proceedings unlawful and that the show-cause notice (SCN) itself suffered from jurisdictional defects as it was allegedly issued by an incompetent officer. The respondents opposed the petition, asserting that the case involved fraudulent ITC transactions, multiple dummy firms, and complex factual issues that could not be adjudicated in writ proceedings.
The Court first examined the jurisprudence surrounding the right to cross-examination in tax adjudication. Referring to multiple precedents, the Court reiterated that the opportunity for cross-examination is not automatically available in every adjudication. Instead, it must be granted only when prejudice is demonstrated and when the facts of the case justify it. Courts have held that failure to permit cross-examination amounts to a violation of natural justice only when such refusal causes demonstrable prejudice affecting the fairness of the adjudicatory process.
The Court emphasised that parties cannot turn show-cause proceedings into full-fledged trials merely by seeking cross-examination of every individual whose statement is recorded. A blanket request is impermissible; instead, the applicant must specify which witness needs to be examined and why. Authorities must consider such requests on their merits and permit cross-examination where necessary, while also recording reasons when declining the same.
Applying these principles, the Court held that the petitioner’s grievance on cross-examination was not sufficient to bypass the statutory appeal mechanism. Even if the request was rejected, such rejection alone could not justify invoking writ jurisdiction unless exceptional circumstances existed.
The Court next considered whether the writ petition could be entertained despite the availability of an appellate remedy. It observed that in cases involving allegations of fraudulent ITC, courts have consistently refrained from exercising writ jurisdiction because such matters typically involve intricate factual matrices, voluminous records, and detailed investigation. These issues are best adjudicated by appellate authorities equipped to evaluate evidence and determine factual disputes.
The Court relied on the Supreme Court’s judgment in Assistant Commissioner (ST) v. Commercial Steel Ltd., which held that writ jurisdiction may be invoked only when there is a breach of fundamental rights, violation of natural justice, excess of jurisdiction, or challenge to the vires of legislation. None of these conditions were satisfied in the present case. Consequently, the petitioners could not circumvent the appeal process.
The Court also referred to a series of its own decisions, including Mukesh Kumar Garg v. Union of India, Sheetal & Sons, and MHJ Metal Techs, where similar allegations of fraudulent ITC were raised. In all such matters, the Court has taken the view that writ jurisdiction should not be exercised because fraudulent ITC claims create substantial loss to the exchequer, undermine the integrity of the GST framework, and require factual determination.
The judgment reviewed these precedents to highlight consistent judicial reluctance to entertain writ petitions in matters relating to bogus ITC, circular trading, non-existent entities, and complex transaction networks. The Court noted that the impugned order in the present case was detailed and part of a larger scheme of transactions allegedly involving multiple individuals and entities, including firms floated by the petitioner and his family. Another co-noticee had already filed an appeal before the appellate authority, further underscoring the appropriateness of the appellate route.
On the issue of jurisdiction, the petitioner argued that the Additional Commissioner lacked authority to issue the SCN. The Court rejected this contention, noting that Circular No. 254/11/2025–GST dated 27 October 2025, read with statutory provisions, empowered the Additional Commissioner to issue notices under Section 122. Therefore, the SCN could not be invalidated on this ground.
Given the allegations of fraud, the existence of an effective appellate remedy, and the lack of exceptional circumstances, the Court held that interference under Article 226 was unwarranted. The petitioner was queried whether they wished to file an appeal under Section 107; counsel responded that the petitioner could not afford the mandatory pre-deposit. The Court held that inability to make the statutory pre-deposit does not constitute grounds for exercising writ jurisdiction.
Accordingly, the writ petition was dismissed, and all pending applications were disposed of. The petitioner was left at liberty to pursue statutory remedies, subject to compliance with pre-deposit requirements.
FULL TEXT OF THE JUDGMENT/ORDER OF DELHI HIGH COURT
