2025 (7) TMI 1189 - HC - GST

Availment of inadmissible Input Tax Credit on the basis of goods-less invoices - no Show Cause Notice was issued and personal hearing also did not take place - violation of principles of natural justice - HELD THAT - The supplier firms being fake and non-existent they were only created to issue fake invoices. Under these circumstances in view of the opinion of this Court in Mukesh Kumar Garg vs. Union of India Ors. 2025 (5) TMI 922 - DELHI HIGH COURT the present writ petition would not be maintainable. In the said case this Court held that where cases involving fraudulent availment of ITC are concerned considering the burden on the exchequer and the nature of impact on the GST regime writ jurisdiction ought not to be ordinarily exercised in such cases. The argument of the Petitioner that the impugned order is passed beyond the limitation period is not tenable as the same has been passed on 27th January 2025 and dispatched on 1st February 2025 with a proper dispatch number. The last date for passing of the order for FY 2017-18 was 5th February 2025 - the Court is not inclined to entertain the present writ petition as it is a case of fraudulent ITC availment. Under these circumstances the Petitioner is permitted to file appeal before the Appellate Authority within a period of one month along with the requisite pre-deposit as per law. - Petition dismissed.

Summary

ISSUES:

Whether a writ petition under Article 226 of the Constitution of India is maintainable in cases involving fraudulent availment of Input Tax Credit (ITC) through fake or non-existent supplier firms.Whether the principles of natural justice, including issuance of Show Cause Notice and opportunity for personal hearing, were complied with before passing the impugned order.Whether the impugned order was passed within the prescribed limitation period under the relevant GST provisions.Whether a party can be permitted to file an appeal beyond the statutory limitation period in GST adjudication proceedings.

RULINGS / HOLDINGS:

Writ jurisdiction under Article 226 is not ordinarily exercisable in cases involving fraudulent availment of ITC, especially where complex factual determinations are required, as such jurisdiction "ought not to be exercised by the Court to support the unscrupulous litigants."The impugned order demonstrates compliance with the "basic requirement of Principles of Natural Justice" through issuance of Show Cause Notices and multiple opportunities for personal hearings, and the case was decided ex parte only for non-responsive parties.The impugned order dated 27th January, 2025 was passed within the limitation period, as the last date for passing the order for the relevant financial year was 5th February, 2025.The petitioner is permitted to file an appeal before the Appellate Authority within one month along with the requisite pre-deposit, and such appeal shall not be dismissed on the ground of limitation if filed within this extended period.

RATIONALE:

The Court relied on the statutory framework of the Central Goods and Services Tax (CGST) Act, particularly Section 16 governing Input Tax Credit and Sections 122(1) and 122(3) relating to penalties for fraudulent availment of ITC.The Court referred to precedent emphasizing that the facility of ITC is "a major feature of the GST regime" intended to facilitate ease of doing business, but misuse through fake invoices and non-existent firms threatens the integrity of the tax system.The Court noted that adjudication of such complex factual issues involving multiple entities and alleged fraudulent transactions is unsuitable for writ jurisdiction and is better suited to statutory appellate and adjudicatory forums established under the CGST Act.The Court underscored the importance of adherence to procedural safeguards, confirming that Show Cause Notices and personal hearings were provided, and non-cooperation by the parties justified ex parte decisions.The Court exercised discretion to allow filing of a belated appeal with pre-deposit to prevent multiplicity of litigation and ensure adjudication on merits within the statutory framework.