The Delhi High Court in M/s Wizard Digitek Computers Pvt. Ltd. v. Union of India & Ors. examined whether a writ petition under Article 226 of the Constitution could be entertained against an Order-in-Original passed under Section 74 of the Central Goods and Services Tax Act, 2017 when an appellate remedy was available under Section 107 of the CGST Act.
The dispute arose from an Order-in-Original dated 29 December 2025 confirming GST demands of Rs. 1,41,70,592 for the period 2018-19 to 2023-24 and Rs. 8,94,692 for 2024-25, together with applicable interest and penalty. The proceedings originated from an investigation in which the Department relied, inter alia, upon electronic data allegedly recovered from a laptop seized during a search at the premises of a third party, loose papers, receipts and statements recorded during investigation.
Challenge Before the Delhi High Court
The petitioner sought interference under Article 226 notwithstanding the availability of an appeal under Section 107. It contended that the adjudication was affected by violation of principles of natural justice, including improper service of hearing notices, inadequate consideration of its detailed reply and denial of an effective opportunity of hearing.
The petitioner also questioned the reliance placed upon electronic records recovered from a third party. Among the objections raised were the alleged absence of compliance with Section 63 of the Bharatiya Sakshya Adhiniyam, 2023, deficiencies in authentication of electronic material, denial of cross-examination of persons whose statements were relied upon, and the effect of an earlier statutory audit conducted under Section 65 of the CGST Act.
Alternative Remedy Under Section 107 of the CGST Act
The Delhi High Court reiterated that an appeal under Section 107 constitutes a comprehensive statutory mechanism through which the appellate authority can examine questions of both fact and law, reassess the material on record and determine the legality and correctness of an adjudication order.
The Court recognised that the existence of an alternative remedy is not an absolute bar to writ jurisdiction. Referring to the Supreme Court’s decision in Assistant Commissioner of State Tax and Others v. Commercial Steel Limited, the Court noted the recognised exceptions involving breach of fundamental rights, violation of natural justice, excess of jurisdiction, or challenge to the vires of legislation.
However, merely alleging one of these exceptions is insufficient. The High Court must independently determine whether the facts disclose circumstances warranting exercise of extraordinary writ jurisdiction despite the statutory remedy.
No Patent Violation of Natural Justice
On the facts, the Court found no such patent violation of natural justice.
The record showed that personal hearings had been fixed on more than one occasion and that the petitioner’s authorised representative, a Chartered Accountant, appeared at the hearing on 19 December 2025 and submitted a detailed written reply.
Accordingly, the Court held that the grievance was not really one of absence of opportunity to participate in the adjudication. Rather, it concerned the manner in which the adjudicating authority had appreciated and dealt with the petitioner’s defence.
Whether every contention had been adequately answered, whether the reasons recorded were sufficient, and whether the conclusions reached by the adjudicating authority were sustainable were held to be matters concerning the correctness of the adjudication itself. Such questions were considered appropriate for examination by the appellate authority under Section 107.
The Court also observed that an alleged defect in the mode or timing of service of hearing notices would not, by itself, invalidate the adjudication where the authorised representative had actually participated and the petitioner had not demonstrated that the alleged defect prevented it from placing material before the authority.
Electronic Evidence and Cross-Examination
The petitioner’s objections concerning electronic evidence were similarly left for consideration in statutory appeal.
The Court observed that questions relating to compliance with Section 63 of the Bharatiya Sakshya Adhiniyam, authenticity and integrity of electronic records, chain of custody, conclusions flowing from forensic examination and the evidentiary value of the electronic material required detailed examination of the factual and evidentiary record.
The Department maintained that the adjudication was not founded solely upon one statement or electronic record but upon a cumulative assessment of investigation records, documentary material, electronic data, statements and other corroborative evidence.
The High Court held that determining the admissibility and evidentiary weight of this material would involve appreciation of evidence—an exercise appropriately undertaken by the statutory appellate authority rather than in writ proceedings.
The same principle was applied to the petitioner’s grievance concerning denial of cross-examination. Whether the third-party statements constituted the sole basis of the demand, whether they were merely corroborative, whether cross-examination was required and whether any prejudice resulted were held to be issues intrinsically connected with the merits of the adjudication.
Earlier GST Audit Does Not Automatically Justify Writ Intervention
The petitioner also relied upon an earlier statutory audit under Section 65 of the CGST Act and questioned the initiation of subsequent proceedings.
The Court held that determining whether the audit covered the same transactions, whether the subsequent proceedings were founded upon fresh material discovered during investigation, whether the two proceedings overlapped and whether there was any duplication of tax liability would require examination of the respective records.
These were disputed questions of fact and law and were therefore considered more suitable for adjudication in the statutory appellate proceedings.
Delhi High Court’s Decision
The Delhi High Court concluded that the case did not fall within any of the recognised exceptions permitting the petitioner to bypass the statutory appellate remedy.
The issues raised substantially concerned the correctness of the adjudication, appreciation and admissibility of evidence, and legality of the conclusions recorded in the Order-in-Original. The Court therefore declined to exercise extraordinary jurisdiction under Article 226 and dismissed the writ petition, leaving the petitioner free to file an appeal under Section 107 of the CGST Act.
Importantly, the High Court expressly refrained from expressing any opinion on the merits of the dispute, including the admissibility, authenticity or evidentiary value of the material relied upon by the Department. All questions of fact and law were left open for independent consideration by the appellate authority.
Limitation Protection for Section 107 Appeal
The judgment also provides an important procedural safeguard. The Court directed that if the petitioner files an appeal under Section 107, the period during which the writ petition remained pending before the High Court shall not be reckoned for the purposes of limitation.
The appellate authority was directed to consider the appeal, including the question of limitation, independently in accordance with law and without being influenced by observations made in the judgment.
Key Takeaway
The decision reinforces the principle that Article 226 should ordinarily not be used as a substitute for the statutory GST appellate mechanism where the dispute requires examination of evidence, factual findings or the correctness of an adjudication order.
Allegations concerning inadequate consideration of replies, electronic evidence, denial of cross-examination or an earlier statutory audit will not automatically justify writ intervention where the taxpayer participated in adjudication and the issues can effectively be examined in an appeal under Section 107 of the CGST Act.
At the same time, the judgment preserves the taxpayer’s substantive rights by leaving all factual and legal issues open for appeal and excluding the period spent pursuing the writ petition while considering limitation.
