The Supreme Court has declined to interfere with a Delhi High Court judgment that refused to entertain a writ petition challenging a GST demand of approximately ₹8.75 crore, holding that the taxpayer has an efficacious statutory remedy of appeal under Section 107 of the Central Goods and Services Tax Act, 2017.
A Bench comprising Justice J.B. Pardiwala and Justice K. Vinod Chandran found no error of law in the Delhi High Court’s decision to direct the taxpayer to pursue the statutory appellate mechanism.
After hearing senior counsel Arvind P. Datar for the company and examining the material on record, the Supreme Court observed that “no error, not to speak of any error of law” could be attributed to the High Court’s judgment.
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Four Weeks Granted to File GST Appeal
Although the Supreme Court dismissed the Special Leave Petition, it granted the company four weeks to file a statutory appeal against the adjudication order.
The Court clarified that the appellate authority must decide the appeal independently and on its own merits. It specifically directed that the authority should not be influenced by any observations made by the Delhi High Court in the judgment under challenge.
The Supreme Court also left all the contentions advanced by the company open. These arguments may now be raised before the appellate authority in accordance with law.
The Court’s direction ensures that the dismissal of the writ petition and the Special Leave Petition does not amount to an adjudication of the underlying GST dispute on merits.
Dispute Involves ₹8.75 Crore Demand on Eleven Audit Issues
The proceedings arose from an Order-in-Original dated March 24, 2026, passed under Section 74 of the CGST Act. Through the order, the GST authorities confirmed a demand of approximately ₹8.75 crore against the company, along with applicable interest and penalty.
The demand covered eleven issues arising from GST audit proceedings. Its principal component concerned the tax treatment of catering services and the sale of pre-packaged food products.
The GST authorities allegedly treated these transactions as a composite supply taxable at 18%. The company disputed the adjudication and approached the Delhi High Court directly under Article 226 of the Constitution instead of first filing an appeal under Section 107 of the CGST Act.
Delhi High Court Had Declined to Examine Merits
The Delhi High Court held that Section 107 provides a complete, comprehensive and efficacious mechanism for challenging GST adjudication orders.
It observed that the appellate authority possesses wide powers to examine questions of fact and law, reassess the material on record, scrutinise findings and determine the legality and correctness of an adjudication order.
According to the High Court, constitutional courts ordinarily exercise restraint when the legislature has established a specialised adjudicatory framework with a hierarchy of statutory remedies. Matters involving appreciation of evidence, adequacy of documents and correctness of factual findings should ordinarily be examined by the statutory appellate authority.
The High Court, however, acknowledged that the existence of an alternative remedy does not impose an absolute prohibition on the exercise of writ jurisdiction. A High Court may still intervene in exceptional cases involving a breach of fundamental rights, violation of natural justice, excess or absence of jurisdiction, or a challenge to the constitutional validity of a statute or delegated legislation.
It nevertheless concluded that the company’s case did not fall within any of these recognised exceptions.
Participation in Audit and Adjudication Proceedings Noted
Before the High Court, the company reportedly argued that the GST adjudicating authority had failed to properly consider its replies and supporting documents.
The High Court examined the adjudication record and found that the company had participated in the audit proceedings, submitted responses to the audit memo and additional audit memo, replied to the show-cause notice, filed documents and attended personal hearings.
It held that a distinction must be drawn between the complete denial of an opportunity of hearing and an allegation that the adjudicating authority failed to properly appreciate the taxpayer’s response.
The Court found that the company’s reply had been noticed in the Order-in-Original. Whether that reply was adequately considered, whether every contention was correctly appreciated and whether the reasons contained in the adjudication order were sufficient were questions concerning the correctness of the decision.
Such issues, it held, did not establish a manifest violation of natural justice or a jurisdictional defect justifying the exercise of extraordinary writ jurisdiction. The Delhi High Court consequently directed the company to pursue its Section 107 remedy.
The High Court also observed that an adjudicating authority is not necessarily required to call for further documents before passing an order when an adequate opportunity to produce material has already been granted.
Time Spent Before High Court Protected
While dismissing the writ petition, the Delhi High Court had protected the company on limitation. It directed that the period during which the writ petition remained pending before it should not be counted while considering the limitation applicable to a statutory appeal.
It further directed the appellate authority to consider the appeal, including any limitation-related question, independently and without being influenced by the High Court’s observations.
The Supreme Court has now supplemented that protection by granting the company a specific period of four weeks to institute the statutory appeal.
GST Demand Not Affirmed on Merits
Importantly, neither the Delhi High Court nor the Supreme Court has held that the ₹8.75 crore demand is legally correct.
The courts confined their consideration to the procedural question of whether the company could directly invoke writ jurisdiction despite having a statutory appellate remedy under Section 107.
Questions relating to whether catering services and pre-packaged food products constitute a composite supply, whether an 18% GST rate is applicable, and whether the remaining audit objections are sustainable have been left open for determination by the appellate authority.
The appellate authority will therefore be required to examine the company’s factual and legal objections, the documents filed during the proceedings, and the findings recorded in the Order-in-Original without treating the High Court’s observations as conclusions on the merits.
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