The Supreme Court has declined to interfere with the Punjab and Haryana High Court’s decision refusing to entertain a writ petition filed by a Gurugram-based manpower supply firm that sought to challenge GST demand orders exceeding ₹1.83 crore on the ground that its Chartered Accountant had allegedly misappropriated funds entrusted for payment of taxes. By dismissing the Special Leave Petition (SLP), the Apex Court has effectively affirmed the High Court’s view that disputes relating to an agent’s alleged misconduct cannot absolve an assessee of its statutory tax obligations. 

A Bench comprising Justice Sanjay Kumar and Justice Sanjeev Sachdeva condoned the delay in filing the Special Leave Petition but found no reason to interfere with the judgment of the Punjab and Haryana High Court. The Court succinctly observed that there was “no good ground and reason” to interfere with the impugned judgment and accordingly dismissed the Special Leave Petition. All pending applications were also disposed of. 

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Background of the Dispute

The litigation arose after the Haryana GST authorities issued multiple demand orders against the manpower supply firm under Section 73 of the Central Goods and Services Tax (CGST) Act, 2017 for the financial years 2017-18, 2018-19, and 2019-20. The authorities alleged non-payment of GST and irregular availment of input tax credit (ITC), resulting in an unpaid tax demand exceeding ₹1.83 crore, apart from applicable interest and penalties.

The assessee contended that, since the introduction of GST, it had completely entrusted its GST compliance, tax computation, and tax payments to its Chartered Accountant. According to the firm, because of initial internet banking difficulties, GST amounts were transferred directly into the Chartered Accountant’s bank account for onward payment to the government.

The firm later claimed to have discovered that the Chartered Accountant had deposited only a part of the tax liability while allegedly misappropriating substantial sums and manipulating GST returns by adjusting fake input tax credits. It asserted that the Chartered Accountant subsequently became untraceable, following which complaints were lodged with the police and later pursued before the Economic Offences Wing, Gurugram, alleging cheating and fraud.

High Court Refused to Exercise Writ Jurisdiction

Before the Punjab and Haryana High Court, the petitioner challenged three assessment orders dated 31 December 2023, 26 April 2024, and 22 August 2024, along with the rejection of its rectification application dated 5 May 2025.

The firm argued that the assessment proceedings violated the principles of natural justice, claiming that it had not been afforded an effective opportunity of hearing under Section 75(4) of the CGST Act. It also contended that the authorities had passed mechanical orders without considering the fraud allegedly committed by the Chartered Accountant.

The State of Haryana opposed the petition, submitting that multiple statutory notices, including Form GST ASMT-10, had been issued and several opportunities for personal hearing had been provided. According to the State, the petitioner failed to respond to the show cause notices and did not participate in the adjudication proceedings.

The High Court accepted the State’s submissions, observing that the assessment orders specifically recorded service of notices and grant of hearing opportunities. The Court further held that the Chartered Accountant acted as the petitioner’s agent, and any negligence or misconduct on the part of the agent would legally bind the principal.

The High Court also emphasized that the petitioner had an effective statutory appellate remedy under Section 107 of the CGST Act, which it had failed to avail. It reiterated the settled principle that writ jurisdiction under Article 226 of the Constitution should not ordinarily be invoked where an efficacious statutory remedy exists.

Further, the High Court held that allegations regarding misappropriation by the Chartered Accountant involved disputed questions of fact that could not be adjudicated in writ proceedings. Such grievances, the Court observed, may be pursued through appropriate civil or criminal proceedings against the professional concerned but cannot justify setting aside tax demands.

The Court also upheld the rejection of the firm’s rectification application, clarifying that Section 161 of the CGST Actpermits rectification only of errors apparent on the face of the record, whereas the petitioner’s allegations required detailed factual adjudication beyond the limited scope of the provision.

Supreme Court Declines Relief

The assessee carried the matter to the Supreme Court by filing a Special Leave Petition against the High Court’s judgment.

After hearing counsel, the Supreme Court condoned the delay in filing the petition but refused to interfere with the High Court’s decision. The Bench held that no ground existed warranting interference and dismissed the Special Leave Petition, thereby allowing the High Court’s judgment to attain finality.

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