Court Emphasizes Appellate Jurisdiction Under Section 107 of CGST Act, Rejects Jurisdictional Objections Against DGGI's Authority
In a significant judgment delivered on September 16, 2026, the Delhi High Court (Division Bench) dismissed writ petitions filed by RPP Infra Projects Ltd challenging orders confirming Input Tax Credit (ITC) demands and penalties under the Central Goods and Services Tax Act, 2017 (CGST Act). The petitions, filed separately for the company's GST registrations in Karnataka, Tamil Nadu, and Telangana, sought to quash a common adjudication order passed by the Additional Commissioner, Directorate General of GST Intelligence (DGGI), Delhi North, dated February 4, 2025.
The petitioners contended that their replies to the show-cause notices were ignored, alleged lack of jurisdiction of the DGGI and Delhi North Commissionerate, and relied on Circular No. 171/03/2022-GST to argue against the recoverability of the ITC demands. However, the Court observed that these objections did not warrant interference under Article 226 of the Constitution of India, as a statutory remedy existed under Section 107 of the CGST Act.
The case arose from an investigation by the Kanpur Regional Unit of the DGGI into alleged fraudulent ITC claims involving a chain of transactions without actual supply of goods or services. The Department alleged that ITC was passed through multiple entities ending with several recipients, including the petitioners, who were held liable for ITC amounts of Rs. 2.62 crore (Karnataka), Rs. 10.57 lakh (Tamil Nadu), and Rs. 2.94 crore (Telangana), along with interest and penalties.
The petitioners asserted that they were subcontracted by M/s Sunil Hitech Engineers Ltd. through M/s Univista Contractors Ltd. and that genuine work was executed, supported by invoices, work orders, bank records, and ledgers. They also challenged the jurisdiction of the DGGI to issue notices and the appropriateness of adjudication by the Delhi North Commissionerate rather than state tax authorities.
The Court thoroughly examined the grounds raised. It held that non-reproduction of the petitioners' reply in the adjudication order does not imply non-consideration, especially where the order states reasons for rejecting the ITC claims. It emphasized that the factual disputes concerning the genuineness of transactions and evidence presented are suited for detailed appellate scrutiny rather than writ jurisdiction.
On jurisdictional objections, the Court referred to the Supreme Court precedent in Armour Security (India) Ltd. v. Commissioner, CGST, which upheld the DGGI's authority to investigate and adjudicate across state boundaries based on intelligence inputs. The administrative allocation of taxpayers to state authorities did not exclude DGGI jurisdiction or adjudication by Delhi North, especially given applicable notifications and circulars assigning such powers.
Regarding Circular No. 171/03/2022-GST, which differentiates between recoverability of ITC under various factual scenarios, the Court stated that determining applicability requires detailed factual examination, which falls within the purview of the appellate authority.
Consequently, the Court declined to entertain the writ petitions and directed the petitioners to file statutory appeals within four weeks with the requisite pre-deposit. It extended interim protection against coercive action for the same period to enable the petitioners to avail the appellate remedy.
This judgment reaffirms the principle that statutory appeal mechanisms under the GST law are effective and exclusive forums for adjudicating disputes involving ITC demands and penalties, and writ jurisdiction cannot be invoked as a substitute for such remedies. It also clarifies the extent of DGGI's jurisdiction and the scope of administrative allocation of taxpayers for enforcement.
Bottom Line:
GST - Writ jurisdiction - Availability of statutory remedy under Section 107 of the Central Goods and Services Tax Act, 2017 - Petitioners challenging orders confirming ITC demands and penalties - Court declines to interfere in writ jurisdiction as statutory appellate mechanism is effective for addressing factual and legal grievances.
Statutory provision(s):
Article 226, Constitution of India; Sections 6(2)(b), 50, 74(9), 75(6), 107, 122(3)(a) of the Central Goods and Services Tax Act, 2017; Integrated Goods and Services Tax Act, 2017; Circular No. 171/03/2022-GST; Circular No. 239/33/2024-GST; Notification Nos. 14/2017-Central Tax, 02/2022-Central Tax, 27/2024-Central Tax.
RPP Infra Projects Ltd, Karnataka v. Union of India, (Delhi)(DB) : Law Finder Doc Id # 2979771
