Delhi High Court Declines GST Refund Challenge In Writ, Says Appeal Lies Before GSTAT

The Delhi High Court has declined to entertain a writ petition challenging rejection of GST refund claims, holding that the petitioner must avail the statutory remedy of appeal before the Goods and Services Tax Appellate Tribunal (GSTAT).

A division bench of Justices Nitin Wasudeo Sambre and Ajay Digpaul was dealing with a plea filed by Mahanadi Exporttek Private Limited assailing an appellate order that had upheld rejection of its refund claims aggregating over Rs. 4 crore under Section 54 of the Central Goods and Services Tax Act, 2017.

Petitioner contended that the refund was wrongly denied on grounds not disclosed in the show cause notices, including reliance on DGARM alerts and alleged irregularities concerning suppliers.

It was also argued that no effective opportunity of personal hearing was granted at the adjudication stage, rendering the orders violative of principles of natural justice.

Further, the petitioner submitted that the alternative remedy before the GSTAT was not efficacious, as the Tribunal was not fully functional.

Opposing the plea, the Revenue argued that adequate opportunity had been granted to the petitioner to file replies and participate in the proceedings. It was also submitted that the statutory appellate remedy was available and must be exhausted before invoking writ jurisdiction.

The Court, at the outset, reiterated the settled distinction between lack of jurisdiction and errors in exercise of jurisdiction, observing that writ interference is warranted only in cases of inherent lack of jurisdiction or exceptional circumstances.

Examining the record, the Bench found that the petitioner had been issued show cause notices, had filed replies along with supporting documents, and had been afforded opportunities of personal hearing at both the adjudication and appellate stages.

Pursuant to the show cause notices dated October 15, 2024, and November 4, 2024, the Petitioner was not only called upon to furnish replies but was also afforded the opportunity of a personal hearing.

The notices dated 15.10.2024 provided the Petitioner the option to indicate a convenient date for personal hearing, which was chosen as 28.10.2024, while the notice dated 04.11.2024 designated the date of personal hearing as 11.11.2024.

The Petitioner thereafter submitted replies dated 26.10.2024, 26.10.2024 and 21.11.2024 along with supporting documents.

“The Orders-in-Original dated 22.11.2024 and 05.12.2024 reflect that the adjudicating authority has taken note of the replies and the material placed on record and has recorded findings thereon. The sequence of events demonstrates that the Petitioner was put to notice, afforded an opportunity to respond, and its submissions were available for consideration at the stage of adjudication,” the Court obsderved.

It thus held that the grievance was essentially regarding non-acceptance of the petitioner's submissions, and not denial of opportunity.

Rejecting the contention of violation of natural justice, the Court held that the proceedings did not suffer from any jurisdictional infirmity warranting interference under Article 226 of the Constitution.

On the issue of alternative remedy, the Court noted that the GST Appellate Tribunal is functional and capable of hearing matters, including through virtual mode, and therefore constitutes an efficacious statutory forum.

Accordingly, the Court declined to interfere and disposed of the petition with liberty to approach GSTAT.

For Petitioner: Senior Advocate Prakash Shah with Senior Advocate Jay Savla, Advocate Mihir Mehta, Advocate Mohit Rawal, Advocate Suyog Bhave, Advocate Jas Sanghavi, Advocate Jasdeep Singh Dhillon, Advocate Rajpal Singh, Advocate Aditya Bajaj

For Respondent: Senior Panel Counsel Sangita Malhotra for Respondent No.1/Union of India, Advocate Akash Panwar