Factual challenges to ITC denial must ordinarily be pursued through the statutory appellate remedy.

The Petitioner, a cement trader registered under the GST regime, challenged a show-cause notice dated 22 November 2024 and the consequential Order-in-Original dated 27 February 2025, which confirmed a GST demand of ₹7,26,59,252 on account of alleged wrongful availment of Input Tax Credit (ITC) from suppliers whose GST registrations had been cancelled.

Earlier, the Directorate General of Goods and Services Tax Intelligence had investigated the Petitioner for alleged fraudulent availment and passing on of ITC through non-existent firms. Those proceedings, initiated under Section 122 of the Central Goods and Services Tax Act, 2017, culminated in an Order-in-Original dated 29 January 2025, against which the Petitioner’s appeal was pending.

The Petitioner challenged the subsequent proceedings under Section 73 of the CGST Act, 2017, questioned the constitutional validity of Section 16(2)(c), and alleged violation of natural justice, Section 6(2)(b), and the prohibition against parallel or duplicated proceedings.

Whether the High Court should exercise its writ jurisdiction under Article 226 despite the availability of the statutory appellate remedy under Section 107 of the CGST Act, 2017?

Whether Section 16(2)(c) of the CGST Act, 2017, which conditions ITC on payment of tax by the supplier, is unconstitutional insofar as it may deny ITC to a bona fide recipient?

Whether the impugned proceedings were vitiated by breach of natural justice, including failure to consider the Petitioner’s reply or afford an effective personal hearing?

Whether the subsequent proceedings under Section 73 were barred by Section 6(2)(b) of the CGST Act, 2017 because the same transactions had already been investigated by the DGGI?

Whether the impugned proceedings resulted in parallel or duplicated proceedings and a duplicated tax demand concerning the same subject matter?

The Court applied the statutory appellate remedy under Section 107 of the CGST Act, 2017, holding that writ jurisdiction under Article 226 is ordinarily not exercised where an efficacious alternative remedy exists, except in limited cases such as breach of natural justice, lack of jurisdiction, or challenge to the vires of legislation.

It considered Section 16(2)(c) of the CGST Act, which makes entitlement to ITC conditional upon payment of the tax charged on the relevant supply by the supplier, and relied on Bhandari Scrap Traders v. Union of India, (2026) 161 GSTR 150, wherein the provision was upheld as neither arbitrary nor disproportionate.

The Court also considered Section 6(2)(b), which restricts the initiation of proceedings by another proper officer on the same subject matter, but held that determining whether two proceedings concern an identical subject matter is a mixed question of fact and law requiring examination of the underlying records.

The Court declined to examine the disputed factual issues in writ jurisdiction. The impugned notice was based on the Petitioner’s GST returns, e-way bills, and related records, while the questions of actual receipt of goods, payment of tax by suppliers, transport documentation, delivery records, and payment trails required evidentiary appreciation more appropriately undertaken by the Appellate Authority.

The constitutional challenge to Section 16(2)(c) could not succeed in view of the Supreme Court precedent upholding the provision.

The natural-justice objection also did not justify writ intervention because the record indicated that a hearing had been granted and the Petitioner’s reply had been considered; whether that consideration was adequate was treated as a factual issue and any deficiency was considered curable rather than jurisdictional.

Similarly, the earlier DGGI proceedings concerned penalties for fraudulent availment and passing on of ITC under Section 122, whereas the impugned Section 73 proceedings concerned wrongful availment of ITC from suppliers whose registrations had been cancelled. Whether the two proceedings substantially overlapped, or resulted in duplication, required examination by the Appellate Authority.

The Petitioner was relegated to the statutory appeal under Section 107 of the CGST Act, 2017.

It was permitted to seek exclusion of the period spent pursuing the writ petition under Section 14 of the Limitation Act, 1963, with the application to be considered by the Appellate Authority in accordance with law.

The pending applications were also disposed of.