Writ Petition Against Penalty Order for Fake Billing Non

Writ Petition Against Penalty Order for Fake Billing Non-Maintainable Due to Efficacious Statutory Remedy

Issue

Whether a writ petition under Article 226 of the Constitution of India challenging a penalty order passed under Section 122(1)(ii) for fake billing/passing inadmissible ITC is maintainable when an efficacious statutory remedy of appeal is available under Section 107.

Facts

Proceedings were initiated against the petitioner under Section 122(1)(ii) of the CGST/DGST Act, alleging the issuance of tax invoices without actual supply of goods or services and passing inadmissible Input Tax Credit (ITC).
During the investigation, the recipient entity was found to be non-existent at its registered place of business.
Based on these investigation findings, a consequential penalty order under Section 122(1)(ii) was passed against the petitioner.
The petitioner directly filed a writ petition under Article 226 before the High Court seeking the quashing of the Show Cause Notice (SCN) and the consequential penalty order.
An efficacious statutory remedy to file an appeal against the penalty order existed under Section 107 of the CGST/DGST Act.

Decision

In favour of Revenue: The High Court declined to entertain the writ petition under Article 226 in view of the availability of an efficacious statutory remedy of appeal under Section 107.
Held that all grounds raised by the petitioner, including jurisdictional objections and alleged violations of principles of natural justice, can be thoroughly examined by the Appellate Authority.
The High Court disposed of the writ petition without expressing any opinion on the merits of the case, relegating the petitioner to avail the statutory appellate remedy before the competent authority.
All questions and contentions were left open for consideration by the Appellate Authority.

Key Takeaways

Availability of Alternate Remedy: High Courts will generally not exercise extraordinary writ jurisdiction under Article 226 when a comprehensive statutory appellate mechanism is readily available under Section 107 of the CGST/DGST Act.
Scope of Appellate Authority: Statutory appellate authorities possess full competence to adjudicate all legal and factual challenges, including jurisdictional objections and natural justice violations.
No Premature Intervention in Fraud Allegations: In matters involving complex factual investigations like fake billing and fraudulent ITC passes under Section 122, courts prefer that statutory forums evaluate the evidentiary record first.

HIGH COURT OF DELHI

Marginmart Ifosystems (P.) Ltd.

Assistant Commissioncr CGST

ANIL KSHETRAPAL and Ms. SHAIL JAIN, JJ.

W.P.(C) 9013 OF 2026
CM APPL. 42192 & 42193 OF 2026

JULY 9, 2026

Ms. Apurva Singh and Ms. Mary Jonet, Advs. for the Petitioner. Anish Roy, SSC for the Respondent.

ORDER

1. Through the present Petition, the Petitioner seeks issuance of a writ in the nature of certiorari for quashing the Impugned Show Cause Notice dated 27.09.2025, and the consequential Impugned Order dated 24.03.2026 passed pursuant thereto.

2. The Impugned Order records that proceedings under Section 122(1)(ii) of the Central Goods and Services Tax Act, 2017 [„the Act’] were initiated against the Petitioner on the allegation that invoices were issued without actual supply of goods and that inadmissible Input Tax Credit was passed on to M/s Enriche Retail Private Limited. It further records that, during the course of investigation, M/s Enriche Retail Private Limited was found to be non-existent at its registered place of business, and on that basis the proceedings culminated in the passing of the Impugned Order.

3. Admittedly, the Petitioner has an efficacious statutory remedy of appeal under Section 107 of the Act.

4. Learned counsel representing the Petitioner submits that the Impugned Show Cause Notice as well as the consequential Impugned Order have been issued and passed in a mechanical and predetermined manner, without any independent examination qua the Petitioner. It is further submitted that the proceedings are without jurisdiction and are also violative of the principles of natural justice. On these grounds, it is urged that this Court ought to exercise its extraordinary writ jurisdiction under Article 226 of the Constitution of India.

5. The aforesaid contention, as also all other grounds sought to be urged by the Petitioner, can appropriately be examined by the Appellate Authority in proceedings under Section 107 of the Act.

6. In view of the availability of the aforesaid statutory remedy, and without expressing any opinion on the merits of the contentions raised by the Petitioner, this Court is not inclined to entertain the present Writ Petition. The Petitioner is relegated to avail the remedy of appeal before the competent Appellate Authority, if so advised.

7. Accordingly, the Writ Petition stands disposed of with liberty to the Petitioner to avail the statutory remedy in accordance with law.

8. It is clarified that this Court has not expressed any opinion on the merits of the controversy, and all questions are left open to be considered by the Appellate Authority.