GST On JDAs: Supreme Court Reopens The Writ Jurisdiction Issue

This article summarises the Supreme Court's interim stay in Arham Infra Developers, analysing its implications for writ jurisdiction and statutory remedies under the GST framework.

Introduction

The recent order of the Supreme Court of India in Arham Infra Developers AOP v. Union of India (SLP (C) Nos. 26910/2025 and 27330/2025) marks a key moment in the evolving landscape of Goods and Services Tax (GST) litigation. The Court, while issuing notice to the Union of India, stayed the operation of the assessment order passed by the Assistant Commissioner, CGST & Central Excise, Nashik-I Division.

Although interim in nature, the Supreme Court's intervention has drawn considerable attention because it arises from a detailed judgment of the Bombay High Court dated 29 July 2025, which dismissed two writ petitions being W.P. Nos. 8649 and 8650 of 2025 ("Petitions") filed by Arham Infra Developers AOP and Nirmite Buildtech, both Nashik-based real estate developers.

At its core the case raises an important constitutional question: can taxpayers directly invoke the High Court's writ jurisdiction under Article 226 of the Constitution to challenge GST assessment orders, or they must first pursue the statutory appellate mechanism prescribed under Section 107 of the CGST Act?

The issue has wider resonance in GST litigation, as it tests the delicate balance between constitutional judicial oversight and the statutory appellate framework designed under the GST law to ensure fiscal discipline and procedural hierarchy.

Background of the Case

The Petitioners, Arham Infra Developers AOP and Nirmite Buildtech, had entered into Joint Development Agreements (JDAs) with landowners for carrying out real estate development projects. Pursuant to these arrangements, the Assistant Commissioner, CGST & Central Excise, Nashik-I Division, issued assessment orders dated 27 January 2025 and 31 January 2025, raising demands under the CGST framework.

Instead of availing the statutory appellate remedy under Section 107 of the CGST Act, the Petitioners directly approached the Bombay High Court under Article 226 of the Constitution. They contended that the assessment orders were jurisdictionally invalid, procedurally flawed, and contrary to settled principles of GST law. Their core argument was that the JDAs in question did not constitute a "supply" within the meaning of Section 7 of the CGST Act and were therefore not liable to GST.

In support of their challenge, the Petitioners relied on the Supreme Court's order in Civil Appeal (D) No. 33259 of 2018 and the Bombay High Court's interim order in Nirmal Lifestyle Developers Pvt. Ltd. v. Union of India (W.P. (L) No. 11011 of 2025), where similar relief had been granted. They further argued that the appellate process under Section 107 did not constitute an effective remedy, as it involved a mandatory pre-deposit, which they claimed imposed an unreasonable financial burden. Hence, they sought the High Court's direct intervention under its extraordinary writ jurisdiction.

The Revenue authorities, including the Union of India, the State of Maharashtra, and the GST Council, opposed the petitions. They contended that the CGST Act provides a comprehensive and efficacious appellate mechanism that taxpayers are bound to follow. According to the Revenue, the dispute involved mixed questions of fact and law—particularly concerning the interpretation of the JDAs—that could not be effectively adjudicated in writ proceedings. Entertaining such petitions, they argued, would undermine the statutory structure of the GST law and encourage taxpayers to bypass the legislatively prescribed appellate process.

Decision of the Bombay High Court

The Division Bench of the Bombay High Court dismissed both petitions, holding that they were not maintainable in light of the efficacious statutory remedy of appeal available under Section 107 of the CGST Act. The Court found that the Petitioners had directly invoked its writ jurisdiction under Article 226 despite having a clear appellate route under the statute.

Misstatement Regarding Alternate Remedy

The Court noted that paragraph 42 of the petitions contained a false statement asserting that no alternate or effective remedy existed. Describing this assertion as "obviously false and erroneous," the Bench held that such misstatements compromise the integrity of judicial proceedings. It emphasized that litigants owe a duty of full and candid disclosure and must not conceal or distort the availability of statutory remedies. Any petitioner invoking writ jurisdiction must clearly explain why such intervention is warranted despite the existence of an alternate remedy. Unsubstantiated assertions of "no remedy" were deemed impermissible and amounted to an abuse of process.

Doctrine of Exhaustion of Alternate Remedies

Reaffirming settled constitutional principles, the High Court held that writ jurisdiction under Article 226 is discretionary and cannot be used as a substitute for statutory appeals. Judicial interference under Article 226, it observed, is warranted only in exceptional circumstances such as:

1. violation of principles of natural justice,
2. lack of jurisdiction, or
3. manifest illegality or constitutional infirmity.

Since none of these conditions were either pleaded or proved, the Court held that the petitions were not maintainable. It emphasised that allowing taxpayers to bypass statutory mechanisms would defeat the legislative intent underlying the CGST framework.

Factual Nature of the Dispute

The Court further observed that the controversy involved complex factual questions concerning the taxability of JDAs. While certain judicial decisions have recognized that JDAs may, in specific circumstances, not amount to a "supply" under GST, such determinations necessarily depend on the precise contractual terms, consideration structure, timing of possession transfer, and mutual obligations between the parties. These fact-intensive inquiries, the Court held, are best examined by adjudicatory or appellate authorities rather than by a writ court exercising summary constitutional jurisdiction.

Observations on Litigation Conduct

The Bench expressed strong disapproval of the Petitioners' conduct in filing writ petitions based on incorrect assertions. It noted that such litigation often aims to circumvent the statutory pre-deposit requirement or to secure interim relief through constitutional proceedings. The Court cautioned that such tactics trivialize the sanctity of constitutional remedies and burden the judiciary with matters that properly belong to specialized statutory forums under the GST law.

Judicial Precedents on Judicial Restraint

To support its reasoning, the High Court referred to several authoritative precedents reaffirming the principle of judicial restraint. It relied on State of Maharashtra v. Greatship (India) Ltd. (Civil Appeal No. 4956 of 2022), where the Supreme Court held that High Courts should not entertain writ petitions against assessment orders when an appellate remedy exists. It also cited Bank of Baroda v. Farooq Ali Khan [(2025) 171 Taxmann.com 643], which underscored that constitutional courts must respect statutory frameworks such as the Insolvency and Bankruptcy Code.

Further, the Bench referred to foundational judgments including Whirlpool Corporation v. Registrar of Trade Marks [(1998) 8 SCC 1]* and Harbanslal Sahnia v. Indian Oil Corporation Ltd. [(2003) 2 SCC 107], which recognize only limited exceptions to the alternate remedy rule—exceptions the Court found inapplicable in the present case. It also cited its own recent ruling in Oberoi Constructions v. Union of India [(2025) 137 GSTR 601], where similar GST-related writ petitions were dismissed on the same principle.

Relief and Directions

While dismissing the petitions, the High Court adopted a fair and balanced approach. Acknowledging that the Petitioners may have acted on legal advice, it granted them liberty to file statutory appeals before the Appellate Authority within four weeks. The Court directed that, if such appeals were filed after complying with the mandatory pre-deposit requirement, they should be heard on merits without reference to limitation.

Through this reasoned judgment, the Bombay High Court reaffirmed the doctrine of alternate remedy as a cornerstone of judicial discipline. It clarified that while constitutional courts must safeguard fundamental rights, they must also respect legislative intent and the integrity of the statutory appellate hierarchy established under the GST framework.

Supreme Court's Interim Intervention

Following the Bombay High Court's dismissal, the Petitioners approached the Supreme Court by way of Special Leave Petitions (SLP (C) Nos. 26910/2025 and 27330/2025). The Supreme Court issued notice to the Union of India and granted an interim stay on the operation of the impugned assessment orders passed by the Assistant Commissioner, CGST & Central Excise, Nashik-I Division.

This interim order does not overturn the High Court's reasoning but merely preserves the status quo pending further adjudication. The Supreme Court's eventual decision is expected to clarify the extent to which High Courts may exercise writ jurisdiction in GST matters despite the existence of statutory appellate remedies.

Conclusion

The Arham Infra Developers case represents a defining moment in delineating the limits between statutory remedies and constitutional oversight in India's GST regime. The Bombay High Court's decision reinforces the importance of judicial restraint and adherence to the statutory process, while the Supreme Court's interim stay keeps the constitutional question open for authoritative resolution.

The final ruling is expected to clarify how far taxpayers can invoke Article 226 to challenge GST assessments despite available statutory remedies, shaping the future course of tax litigation. It underscores that while writ jurisdiction remains a vital constitutional safeguard, its exercise must align with legislative intent to preserve procedural order and institutional balance within the GST framework.

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