Taxpayers facing penalties over an alleged 113-firm fake ITC syndicate must pursue statutory appeals, Delhi High Court says

The petitioners challenged a common adjudication order dated 25 March 2026, passed against 154 noticees, which imposed penalties under Section 122 of the Central Goods and Services Tax Act, 2017 (“CGST Act”).

The order arose from an investigation into an alleged syndicate of fake firms and ineligible input tax credit.

The petitioners alleged, among other things, denial of natural justice, absence of a limitation period under Section 127, lack of action by the proper officer, and that their liability should be assessed under Section 122(3), rather than Sections 122(1) or 122(1A).

They also questioned the pre-deposit requirement for an appeal.

The Court noted that an appeal under Section 107 was available

Whether the High Court should entertain the writ petitions despite the petitioners’ statutory right of appeal under Section 107 of the CGST Act

Whether the petitioners had identified a specific denial of natural justice warranting writ intervention

Whether the limitation, proper-officer and statutory-liability questions should be examined in writ proceedings or by the Appellate Authority

Whether the applicable pre-deposit requirement should prevent the petitioners from pursuing their statutory appeals

Section 107 of the CGST Act provides a statutory appellate remedy against the impugned adjudication order.

The Court applied the principle that, where such an alternative remedy is available and the issues require consideration of the adjudication record and statutory provisions, a writ court may decline to examine those matters in the first instance.

The petitioners’ contentions concerned Sections 122(1), 122(1A), 122(3) and 127 of the CGST Act; the Court left their interpretation and application to the Appellate Authority.

As to pre-deposit, it referred to Gaurav Jain and Anr. v. Joint Commissioner (Appeals-II), CGST Delhi Zone & Anr., W.P.(C) 8414/2026, subject to that judgment’s applicability and fulfilment of its conditions

The Court found no specific instance showing that the petitioners had been denied a hearing or that a particular submission or document had not been considered.

The record showed that Siya Seth’s statement had been recorded and that a detailed reply to the show-cause notice had been submitted; the adequacy of the opportunity and consideration of material could be assessed on appeal

The limitation, proper-officer and statutory-liability issues likewise required examination against the facts and adjudication record, making the Appellate Authority the appropriate forum.

Given that the common order concerned 154 noticees and arose from the same investigation, the Court declined to undertake that examination in the first instance

It did not decide the merits of those contentions.

The petitioners may avail themselves of the benefit of Gaurav Jain, subject to its applicability to their cases and compliance with its conditions