Writ Petition by Sanskriti Exim Pvt. Ltd. Dismissed for Challenging Overlapping GST Investigations, Court Highlights Distinct Subject Matter and Reliance on Statutory Appeals
In a significant judgment dated 18th September 2026, the Delhi High Court (Division Bench comprising Justices Anil Kshetarpal and Shail Jain) dismissed the writ petition filed by Sanskriti Exim Private Limited against the Directorate General of GST Intelligence (DGGI), Delhi Zonal Unit, upholding the jurisdiction of the DGGI to initiate proceedings under Section 74 of the Central Goods and Services Tax Act, 2017 (CGST Act) despite prior investigations by State GST authorities.
The petitioner company, engaged in the export of readymade garments and registered under GST from July 2017, challenged a Show Cause Notice issued by the DGGI dated 29 July 2024 and the consequential Order-in-Original dated 31 January 2025, which confirmed a demand of over Rs. 7.81 crore relating to alleged fraudulent availment and utilization of Input Tax Credit (ITC) based on invoices from fictitious/non-existent suppliers. The petitioner argued that the DGGI's proceedings were barred by Section 6(2)(b) of the CGST Act as the State GST authorities had already initiated and concluded proceedings concerning wrongful ITC claims for overlapping financial years.
The Court, however, clarified that the statutory bar under Section 6(2)(b) applies only if the subsequent proceedings concern the "same subject matter." Drawing on the Supreme Court's ruling in M/s Armour Security (India) Ltd. (2025 INSC 982), the Court held that mere overlap in financial periods or involvement of ITC does not constitute the same subject matter if the investigations address distinct infractions or liabilities. Here, while State GST proceedings under Section 73 focused on ineligible ITC from cancelled or non-existent suppliers for FY 2017-18 and 2018-19, the DGGI's investigation under Section 74 targeted fraudulent availment based on invoices from 20 non-existent entities, utilization towards IGST on exports, and consequent refund claims spanning FY 2017-18 to 2019-20.
Further, the Court underscored the availability of efficacious statutory remedies under Section 107 of the CGST Act against the Order-in-Original. It declined to entertain the writ petition, emphasizing that disputes involving factual and evidentiary issues are best resolved by the appellate authorities and that the existence of alternate statutory remedies is a crucial factor in exercising discretionary writ jurisdiction under Article 226 of the Constitution.
The petitioner's contention against the issuance of a consolidated Show Cause Notice covering multiple financial years was also rejected. The Court referred to precedents, including Ambika Traders (2025 SCC Online Del 6913), holding that the CGST Act does not prohibit consolidated notices under Section 74 and that issues regarding limitation and validity of demands for specific years are to be examined in appellate proceedings.
In conclusion, the Delhi High Court dismissed the writ petition, clarifying that its observations do not preclude the petitioner from raising all permissible grounds before the appellate authority. The decision reinforces the principle that parallel proceedings by Central and State GST authorities are permissible if they address different subject matters and stresses the primacy of statutory appellate mechanisms over writ jurisdiction once adjudication is complete.
Bottom Line:
GST - A writ petition challenging the jurisdiction of the Directorate General of GST Intelligence (DGGI) to initiate proceedings under Section 74 of the CGST Act, 2017, despite prior proceedings by the State GST authorities, is not maintainable when the adjudication has culminated in an Order-in-Original and statutory appellate remedies are available.
Statutory provision(s):
Sections 6(2)(b), 73, 74, 107 of the Central Goods and Services Tax Act, 2017; Section 20 of the Integrated Goods and Services Tax Act, 2017; Section 73 and 74 of the Delhi Goods and Services Tax Act, 2017; Article 226 of the Constitution of India
