Second Petition Can't Be Filed If First Petition Challenging ITC Reversal Is Unconditionally Withdrawn: Delhi High Court

The Delhi High Court has held that the petitioner, having unconditionally withdrawn the earlier petition and liberty being specifically declined to the petitioner, is precluded from filing the fresh petition seeking the same relief that was earlier withdrawn by the petitioner.

The bench of Justice Sanjeev Sachdeva and Justice Ravinder Dudeja has relied on the decision of the Supreme Court in the case of Sarguja Transport Service vs. STAT, in which the Supreme Court explained that the principle underlying Order 23 Rule 1 CPC should be extended to a written petition in the interest of the administration of justice, not only on the on the ground of resjudicata but on the ground of public policy, and to discourage litigants from indulging in bench hunting tactics. The Supreme Court noticed that very often, when the arguments are advanced and the parties are of the view that the Court is not agreeing with them, they seek to withdraw the petition so that they can file a second petition before a more suitable or convenient bench. The Supreme Court discouraged such moves on the grounds of bench hunting.

The petitioner/assessee sought a declaration that the reversal of the input tax credit by the respondent/department is illegal and sought a refund of the input tax credit amounting to Rs 19,65,00,000.

A preliminary objection is raised by the respondents on the ground that the petitioner had earlier filed a petition, WP (C) 10647/2021, claiming exactly the same relief. However, the petition was unconditionally withdrawn on October 29, 2021, and as such, the present petition would be barred, applying the principle of resjudicata and issuing estoppel.

The petitioner contended that the petition was withdrawn, though unconditionally; however, the petitioner had clarified that he would not wish to press for a refund until the investigation was completed. The investigation is now complete, and as such, the petitioner has filed the subject petition.

The court noted that at the time of hearing the matter, when the bench was not agreeing with the petitioner, the petitioner unconditionally sought to withdraw the petition. The court, in the last line of the last paragraph of the order, specifically clarified that no liberty has been granted to the petitioner and clearly indicates that when the bench was not agreeing with the petitioner, the petitioner sought to unconditionally withdraw the petition.

The court noticed that the director of the petitioner was not joining the investigation, and as such, the department was constrained to take coercive steps.

“The petitioner having unconditionally withdrawn the earlier petition and liberty being specifically declined to the petitioner, the petitioner is precluded from filing the present petition seeking the same relief which was earlier withdrawn by the petitioner. No doubt, the petitioner had withdrawn the proceedings pending investigation. However, the said qualification would have only applied if the investigation had exonerated the petitioner. In the instant case, the investigation has found the petitioner culpable, and accordingly, a show cause notice has been issued to the petitioner, which is pending adjudication,” the court said while dismissing the petition.

Counsel For Petitioner: Sahil Yadav

Counsel For Respondent: Bhagvan Swarup Shukla

Case Title: Jetibai Grandsons Services India Pvt Ltd Versus Union Of India & Ors.

Citation: 2024 LiveLaw (Del) 384

Case No.: W.P. (C) 438/2024

Click Here To Read The Order