2025 (7) TMI 1613 - HC - GST

Challenge to impugned adjudication order - fraudulent availment of GST through non-existent firms - typographical or inadvertent error in the DRC-07 - time limitation for filing appeal - HELD THAT - In the opinion of the Court since the present matter relates to fraudulent availment of ITC and the impugned order is an appealable order the Petitioner Firm ought to avail of its appellate remedy. Further the grounds raised by the Petitioner can clearly be agitated before the Appellate Authority. This view is also supported by the decision of this Court in Mukesh Kumar Garg vs. Union of India Ors. 2025 (5) TMI 922 - DELHI HIGH COURT wherein it is clearly held that in case of fraudulent availment of ITC through bogus invoicing writ petitions ordinarily are not to be entertained. The mere fact that there is a typographical or inadvertent error in the DRC-07 is not a sufficient reason to entertain a writ petition. The Petitioner is accordingly relegated to the appellate authority - In view of the submissions made by the ld. SSC let the DRC-07 be rectified within a period of one week. Thereafter within 30 days the Petitioner shall file the appeal along with the pre-deposit. The limitation period for filing the appeal has already expired. If the same is filed within a period of 30 days after rectification of DRC-07 along with the pre-deposit it shall be adjudicated on the merits and shall not be dismissed on the ground of limitation - The appeal shall be filed by the Petitioner by mentioning the financial year as 2018-19. Petition disposed off.

Summary

ISSUES:

Whether fraudulent availment of Input Tax Credit (ITC) through bogus or non-existent firms constitutes a valid ground for raising demand and penalties under the Central Goods and Services Tax (CGST) Act.Whether a typographical error in the financial year mentioned in the demand notice (DRC-07) affects the validity of the adjudication order.Whether writ jurisdiction is appropriate for challenging orders involving complex factual disputes related to fraudulent ITC claims.The applicability of appellate remedies under Section 107 of the CGST Act in cases involving allegations of fraudulent ITC availment.

RULINGS / HOLDINGS:

The Court held that the impugned adjudication order raising demand for fraudulent availment of ITC through bogus invoices is valid and the Petitioner must avail of the appellate remedy; the order is an appealable order under Section 107 of the CGST Act.The typographical error in the financial year mentioned in the DRC-07 is not a sufficient ground to invalidate the order, as such errors can be rectified under Section 161 of the CGST Act.The Court held that writ petitions ordinarily are not to be entertained in cases involving fraudulent availment of ITC through bogus invoicing, as such matters require detailed factual analysis unsuitable for writ jurisdiction.The Petitioner is relegated to file an appeal within 30 days after rectification of the DRC-07, and the appeal shall not be dismissed on the ground of limitation if filed within this period with the pre-deposit.

RATIONALE:

The Court applied the statutory framework under the CGST Act, particularly Sections 16 (Input Tax Credit), 107 (Appeal), 122 (Penalty), and 161 (Rectification of orders), emphasizing the business-friendly intent of Section 16 while recognizing the misuse of ITC provisions through bogus invoicing.The Court relied on precedent establishing that writ jurisdiction is an extraordinary remedy and is generally inappropriate for adjudicating complex factual disputes involving fraudulent tax claims, to prevent multiplicity of litigation and contradictory findings.The decision reflects the doctrinal position that appeals under the CGST Act are the proper forum for contesting such orders, and that typographical errors in demand notices can be corrected without affecting substantive rights.