The Delhi High Court, in Sodexo India Services Private Limited v. Union of India & Anr., has declined to interfere with an Order-in-Original passed under Section 74 of the Central Goods and Services Tax Act, 2017. The Court held that where the taxpayer had participated in the audit and adjudication proceedings, filed detailed replies, produced supporting documents and attended personal hearings, disputes concerning the sufficiency of evidence or adequacy of consideration of the reply should ordinarily be examined by the statutory appellate authority under Section 107 of the CGST Act.
The judgment was pronounced on 15 July 2026 by a Division Bench comprising Justice Anil Kshetrapal and Justice Shail Jain in W.P.(C) 9153/2026. The petition challenged an Order-in-Original dated 24 March 2026 confirming a demand of approximately ₹8.75 crore, together with applicable interest and penalty, on eleven issues arising from audit proceedings.
Background of the Dispute
The principal component of the GST demand related to the allegation that Sodexo’s supply of catering services and sale of pre-packaged food products constituted a composite supply taxable at the rate of 18 per cent.
During the audit and adjudication proceedings, the petitioner submitted replies to the Audit Memo, the Additional Audit Memo and the show cause notice dated 29 September 2025. It also furnished agreements, invoices, reconciliations and other documentary evidence. Personal hearings were conducted before the adjudicating authority prior to the passing of the impugned order.
Before the High Court, the petitioner clarified that its challenge was directed primarily against the decision-making process. It contended that if the adjudicating authority considered the documents on record insufficient, it ought to have called for further documents or clarifications before determining the liability. The petitioner also argued that its reply had not been adequately considered and that the order had been passed mechanically in violation of the principles of natural justice.
Alternative Remedy under Section 107 of the CGST Act
The Delhi High Court reiterated that an appeal under Section 107 of the CGST Act constitutes a complete, efficacious and comprehensive statutory remedy against an adjudication order.
The appellate authority is empowered to examine questions of fact and law, reappreciate the material placed on record, scrutinise the findings of the adjudicating authority and determine the legality and correctness of the order under challenge.
The Court observed that where the legislature has created a specialised adjudicatory framework with a hierarchy of appellate remedies, constitutional courts ordinarily exercise restraint in entertaining a direct challenge to an original adjudication order under Article 226 of the Constitution.
This restraint is not based on an absence of jurisdiction. It is a principle of judicial discretion intended to prevent litigants from bypassing the statutory mechanism, particularly where the dispute involves appreciation of evidence, adequacy of material or correctness of factual findings.
Recognised Exceptions to the Rule of Alternative Remedy
Relying on the Supreme Court’s decision in Assistant Commissioner of State Tax and Others v. Commercial Steel Limited, the High Court noted that the existence of an alternative remedy is not an absolute bar to writ jurisdiction.
A writ petition may still be entertained in exceptional circumstances involving a breach of fundamental rights, violation of natural justice, excess of jurisdiction or a challenge to the validity of a statute or delegated legislation.
However, the Court emphasised that merely alleging one of these grounds is insufficient. The High Court must independently examine whether the facts genuinely disclose an exceptional circumstance warranting interference despite the availability of an efficacious statutory remedy.
Adequate Opportunity Was Granted to the Taxpayer
On the facts of the case, the Court found that Sodexo had actively participated throughout the proceedings. It had filed detailed replies, submitted supporting documents and attended personal hearings.
Accordingly, the case was not one in which the petitioner had been denied an opportunity to present its defence or produce material in support of its case.
The Court rejected the argument that the adjudicating authority was under an inflexible obligation to call for further documents before passing the order. Once a noticee has been given an adequate opportunity to place all relevant material on record, the adjudicating authority is entitled to adjudicate on the basis of the available record.
Whether the material produced was sufficient, whether additional documents ought to have been furnished and whether the conclusions drawn from the evidence were sustainable were held to be questions relating to the merits of the adjudication. Such issues fall within the jurisdiction of the appellate authority under Section 107 of the CGST Act.
Alleged Non-Consideration of the Reply
The Court also rejected the petitioner’s contention that its reply had not been considered.
A reading of the impugned order showed that the adjudicating authority had noticed the petitioner’s reply. Whether the reply had been adequately dealt with, whether each contention had been correctly appreciated and whether the reasons recorded were sufficient were matters concerning the correctness of the adjudication.
The Court held that such grievances did not, by themselves, establish a violation of natural justice or a jurisdictional defect warranting interference under Article 226 of the Constitution.
Earlier Delhi High Court Decisions Distinguished
The petitioner relied on the Delhi High Court’s decisions in Malaysia Airlines Berhad v. Commissioner of Delhi Goods and Services Tax and Future Generali India Insurance Company Limited v. Goods and Service Tax Officer.
The Court held that these decisions did not examine the maintainability of a writ petition in the face of the statutory remedy available under Section 107 of the CGST Act. They also did not consider the principles laid down by the Supreme Court in Commercial Steel Limited.
The earlier decisions could therefore not be treated as laying down a general proposition that every grievance regarding the appreciation of a reply or the sufficiency of supporting documents would justify bypassing the statutory appeal.
Decision of the Delhi High Court
The Delhi High Court concluded that the case did not fall within any recognised exception to the rule of alternative remedy. No manifest violation of natural justice or jurisdictional infirmity had been established.
The writ petition was consequently dismissed, leaving the petitioner free to file an appeal under Section 107 of the CGST Act.
Importantly, the Court directed that the period during which the writ petition remained pending before the High Court would not be counted for the purpose of limitation. The appellate authority was directed to consider the appeal, including the issue of limitation, independently and without being influenced by any observations made in the judgment.
Why Read This Judgment?
The ruling is significant for advocates, Chartered Accountants, Company Secretaries, tax consultants, GST practitioners, corporate tax teams and businesses challenging adjudication orders under the CGST Act. It clarifies the distinction between a genuine violation of natural justice and a dispute concerning the adequacy of evidence, appreciation of submissions or correctness of findings. The judgment also reinforces that statutory appeals under Section 107 should ordinarily be exhausted before invoking writ jurisdiction.
