In a significant ruling underscoring judicial intolerance towards abuse of legal remedies, the Delhi High Court strongly condemned the growing tendency of individuals and entities who wrongfully avail Input Tax Credit (ITC) under the Goods and Services Tax (GST) regime and subsequently attempt to invoke the writ jurisdiction of constitutional courts to delay or derail legal proceedings. The court imposed a cost of ₹1 lakh on the petitioner, marking a stern stance against frivolous litigation tactics used to evade tax accountability.
The case arose when the petitioner, accused of wrongfully availing ITC, approached the High Court under Article 226 of the Constitution of India, seeking relief against proceedings initiated by the GST authorities. The petitioner challenged the legality and procedural fairness of the notice served under Section 74 of the Central Goods and Services Tax Act, 2017, which pertains to the recovery of tax where fraud or wilful misstatement is alleged. The court, however, refused to entertain the petition and observed that the petitioner had an alternative statutory remedy of filing a reply and participating in the adjudication process, which had not been availed.
Justice Purushaindra Kumar Kaurav, who authored the judgment, emphasized that writ jurisdiction is not meant to be an alternative to the statutory process laid down under tax laws, especially in matters involving serious allegations of tax evasion and fraud. The court observed that entertaining such writ petitions not only hampers the functioning of tax authorities but also clogs the docket of the judiciary with premature and unwarranted interventions. The court reiterated the principle that constitutional remedies should not be misused by those attempting to stall lawful investigations and assessments.
In addressing the specifics of the petitioner’s conduct, the court found that there was no violation of principles of natural justice or procedural irregularity in the manner the show-cause notice was issued. The petitioner was found to have rushed to the High Court without submitting a substantive reply or engaging with the departmental proceedings, indicating a clear attempt to avoid scrutiny. The court criticized this practice as a misuse of judicial time and resources and observed that such litigants seek to leverage the prestige of constitutional courts to shield themselves from the consequences of statutory violations.
Further, the court noted that the proliferation of such petitions poses a systemic risk to the effective enforcement of tax laws and reflects a disturbing pattern where assessees, instead of cooperating with tax authorities, seek immediate refuge under the writ jurisdiction even before exhausting basic statutory remedies. In a strong deterrent move, the court not only dismissed the writ petition but also imposed a cost of ₹1 lakh on the petitioner. This monetary penalty, the court held, would serve as a cautionary measure against similar attempts in the future and send a message that judicial forums will not entertain premature challenges aimed at subverting the tax adjudication process.
This ruling sets a precedent reinforcing judicial discipline and respect for statutory mechanisms under the GST framework. It affirms the principle that access to constitutional remedies must be exercised responsibly and not as a tool for obstructing lawful tax enforcement. The Delhi High Court's firm stance highlights the importance of preserving the sanctity of writ jurisdiction and maintaining a balance between individual rights and state interests in financial matters.
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