The Delhi High Court declined to entertain a writ petition filed by M/s Jain Cement Udyog, represented by Sanjay Jain, against a GST demand. Instead, the court directed the petitioner to pursue the statutory appellate remedy under Section 107 of the CGST Act. This decision came after the petitioner challenged a Show Cause Notice (SCN) issued under Section 73, alleging wrongful Input Tax Credit (ITC) availment from suppliers whose GST registrations had been cancelled, resulting in a proposed tax liability of approximately ₹7.27 crore.
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M/s Jain Cement Udyog had earlier faced an investigation by the DGGI for fraudulent ITC and fake invoices, leading to an SCN in 2023. The petitioner contested the subsequent SCN and Order-in-Original before the High Court and questioned the constitutional validity of Section 16(2)(c) of the CGST Act. However, the court noted that the Supreme Court had already upheld this provision in Bhandari Scrap Traders v. Union of India.
The court emphasized that factual issues, such as whether the petitioner received the goods and whether the suppliers discharged the tax, required examination of transport records, delivery challans, and payment trails, best suited for the Appellate Authority. Additionally, the court found that the petitioner had been afforded a personal hearing, and any alleged duplication of proceedings needed further factual and legal analysis, reinforcing the need for the appellate process.
Order Date - 17 September 2026
Parties: M/s Jain Cement Udyog (through Proprietor Sh. Sanjay Jain) vs. Union of India & Anr.
Facts -
- M/s Jain Cement Udyog, through its proprietor Sanjay Jain, was engaged in trading cement and allied products and was registered under GST. DGGI had earlier investigated allegations relating to fraudulent ITC and fake invoices.
- Following the investigation, DGGI issued an earlier SCN in 2023 concerning penalties for fraudulent availment and passing of ITC through non-existent firms. The resulting order was already under appeal.
- During the pendency of that appeal, another SCN was issued under Section 73 alleging wrongful ITC availment from suppliers whose GST registrations had been cancelled. The proposed tax liability was approximately ₹7.27 crore.
- The petitioner challenged the subsequent SCN and Order-in-Original before the High Court and also questioned the constitutional validity of Section 16(2)(c) of the CGST Act.
Issue -
- Whether the High Court should exercise its writ jurisdiction against the GST order when an effective statutory appeal under Section 107 of the CGST Act was available.
Order -
- The Court noted that the constitutional challenge to Section 16(2)(c) was no longer open for consideration in the manner urged by the petitioner, as the Supreme Court had already upheld the provision in Bhandari Scrap Traders v. Union of India.
- The Court found that whether the petitioner had actually received the goods and whether the suppliers had discharged the tax involved examination of transport records, delivery challans and payment trails. Such factual appreciation was more appropriately undertaken by the Appellate Authority.
- On the alleged denial of personal hearing, the Court observed that a hearing had in fact been afforded and the petitioner's reply had been considered. Whether the consideration was adequate was a factual issue that could be examined in appeal.
- The Court also held that the alleged duplication of proceedings required examination of whether the earlier DGGI proceedings and the subsequent Section 73 proceedings concerned the same subject matter. Since this involved factual and legal analysis, the petitioner was relegated to the appellate remedy.
