Writ jurisdiction is declined after adjudication where an efficacious statutory appeal under Section 107 exists.

The Petitioner, engaged in exporting readymade garments and registered under the GST regime from 1 July 2017, was investigated by the DGGI and DRI for alleged fraudulent availment and utilisation of ITC on invoices issued by fictitious or non-existent suppliers, including utilisation towards IGST liability on exports and consequential IGST refunds.

The State GST authorities had earlier issued notices under Section 73 of the DGST Act for FY 2017–18 and FY 2018–19 concerning alleged ineligible ITC from cancelled or non-existent suppliers, resulting in orders confirming tax, interest and penalty.

Subsequently, the DGGI issued a Show Cause Notice dated 29 July 2024 under Section 74 of the CGST Act, read with Section 20 of the IGST Act, covering FY 2017–18 to FY 2019–20 and proposing recovery of ₹7,81,78,980, along with interest and penalties.

During the pendency of the writ proceedings, the adjudicating authority passed Order-in-Original dated 31 January 2025 confirming the demand and imposing penalties, including penalties of ₹7,81,78,980 and ₹6,51,63,242.

Whether the DGGI proceedings were barred by Section 6(2)(b) of the CGST Act because the State GST authorities had already initiated proceedings concerning the alleged wrongful availment of ITC for overlapping periods?

Whether the consolidated Show Cause Notice covering multiple financial years was impermissible under the CGST Act?

Whether the High Court should exercise its writ jurisdiction after the Show Cause Notice had culminated in an appealable Order-in-Original, notwithstanding the Petitioner’s jurisdictional objections?

The Court applied Section 6(2)(b) of the CGST Act, which prohibits initiation of proceedings by a Central GST officer where a State or Union Territory GST officer has already initiated proceedings on the same subject matter.

Relying on M/s Armour Security (India) Ltd. v. Commissioner, CGST, Delhi East Commissionerate & Anr., 2025 INSC 982, the Court held that “same subject matter” concerns the particular tax liability, deficiency or obligation arising from the alleged contravention; the test requires examination of whether the proceedings relate to an identical liability or alleged offence on the same facts and whether the demand or relief sought is identical.

The Court also applied the rule that the existence of an efficacious statutory appeal under Section 107 of the CGST Act ordinarily militates against exercise of discretionary writ jurisdiction under Article 226, relying on M/s PEI Industries v. Union of India & Ors., W.P.(C) 7725/2026, decided on 29 May 2026.

On consolidated notices, the Court relied on Ambika Traders through Proprietor Gaurav Gupta v. Additional Commissioner, Adjudication DGGSTI, CGST Delhi North, 2025 SCC OnLine Del 6913, which held that the CGST Act does not, by itself, prohibit a consolidated Section 74 notice covering more than one financial year.

The Court held that the Petitioner’s challenge had become principally a challenge to the Order-in-Original, against which Section 107 provided an efficacious appellate remedy.

The objections concerning the nature of the ITC, the suppliers involved, the allegation of fraud, the evidentiary material and the overlap between the State and Central proceedings required factual and evidentiary examination by the appellate authority, and did not justify bypassing the statutory appeal merely because the writ petition had initially been filed against the pending Show Cause Notice.

On Section 6(2)(b), the Court distinguished the State proceedings under Section 73, which concerned alleged ineligible ITC from cancelled or non-existent suppliers, from the DGGI proceedings under Section 74, which arose from an investigation into fraudulent ITC allegedly based on invoices issued by fictitious entities and its utilisation for exports and IGST refunds.

Although the proceedings involved overlapping periods and possibly some common transactions, that overlap did not establish identity of liability, contravention or relief. Consequently, the statutory bar could not be invoked merely because both proceedings involved ITC relating to the same assessee.

The challenge to the consolidated notice likewise did not disclose a patent jurisdictional defect; questions concerning limitation, satisfaction of Section 74 requirements and period-wise quantification could be raised in the statutory appeal.

The Court further held that the material on record did not establish, at the writ stage, that the State and DGGI proceedings concerned the “same subject matter” under Section 6(2)(b), and that issuance of a consolidated Show Cause Notice covering multiple financial years was not, by itself, impermissible.

The pending application was also disposed of.

The Court clarified that its observations would not prevent the Petitioner from raising all permissible grounds before the appellate authority, which was directed to decide any appeal independently and uninfluenced by the observations in the judgment.