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2025 (5) TMI 141 - HC - GSTValidity of Demand-cum-Show Cause Notice (SCN) and the subsequent Order-in-Original - proper jurisdiction under the Central Goods and Services Tax Act 2017 (CGST Act) - fake firms and entities were created for the purpose of availing fraudulent ITC - notices issued under Section 73 and 74 - HELD THAT - It is held that the jurisdiction having been established by the said notifications and the opportunity for personal hearing having been granted the Petitioner ought to be relegated to the Appellate Authority for availing the appellate remedy under Section 107 of the Central Goods and Services Act 2017. Since the reply has been filed and the Court has been satisfied upon the issue of jurisdiction the Petitioner is relegated to avail of the appellate remedy before the Appellate Authority. All contentions of the Petitioner are kept open. Accordingly the present writ petition is disposed of in above terms. All the pending applications if any are also disposed of.
1. ISSUES PRESENTED and CONSIDERED
The core legal questions considered by the Court in this matter include:
2. ISSUE-WISE DETAILED ANALYSIS Issue 1: Jurisdiction of the Authority Issuing the SCN and Passing the Impugned Order Relevant legal framework and precedents: Jurisdiction under the CGST Act is governed by statutory notifications and rules specifying the territorial and functional competence of officers empowered to issue notices and pass orders under Sections 73 and 74 of the CGST Act. The principle of lawful jurisdiction requires that the authority issuing a demand notice or adjudicating an issue must be clearly empowered by law or delegated authority. Court's interpretation and reasoning: The Court examined the notifications dated 11th March, 2022 and 25th November, 2024, which delineate the jurisdictional powers of the Principal Commissioner Delhi North and Commissioner Delhi West. Initially, jurisdiction was vested solely in the Principal Commissioner Delhi North, but was subsequently expanded to include the Commissioner Delhi West. The corrigendum issued by the Department, which replaced the adjudicating authority named in the SCN from Delhi North to Delhi West, was scrutinized in light of these notifications. Key evidence and findings: The corrigendum was issued on 28th January, 2025 but dispatched only on 30th January, 2025, after the personal hearing on 29th January, 2025. The Petitioner argued this was a backdated and improper correction. However, the Court found that the notifications clearly empowered both authorities to exercise jurisdiction, and therefore the corrigendum did not invalidate the proceedings. Application of law to facts: The Court held that the jurisdictional challenge raised by the Petitioner was untenable given the statutory notifications expanding jurisdiction. The authority that conducted the hearing and passed the order was within its jurisdiction as per the prevailing notifications. Treatment of competing arguments: The Petitioner's argument that the SCN and order were issued without jurisdiction was countered by the Respondent's reliance on the statutory notifications. The Court gave primacy to the notifications and procedural regularity over the timing of the corrigendum. Conclusions: The Court concluded that the adjudicating authority had proper jurisdiction to issue the SCN and pass the impugned order. Issue 2: Adequacy and Fairness of the Personal Hearing Relevant legal framework and precedents: Principles of natural justice and procedural fairness mandate that a party must be given a reasonable opportunity to be heard before adverse orders are passed. The CGST Act provides for personal hearings before adjudication under Sections 73 and 74. Court's interpretation and reasoning: The Petitioner contended that the personal hearing was not properly conducted, particularly as the jurisdictional challenge was raised but not addressed before the hearing proceeded. The Court noted that the personal hearing was indeed granted and attended by the Petitioner, and the Petitioner's reply was considered by the authority. Key evidence and findings: The hearing took place on 29th January, 2025, and the Petitioner's submissions, including the jurisdictional objection, were on record. The Court found no indication that the hearing was denied or that the Petitioner was prejudiced. Application of law to facts: Since the Petitioner was heard and the reply considered, the Court held that the procedural requirement of a personal hearing was satisfied. Treatment of competing arguments: While the Petitioner emphasized the timing of the corrigendum and alleged procedural irregularity, the Court found that these did not vitiate the hearing or the order. Conclusions: The Court held that the Petitioner was afforded a proper opportunity of hearing and that the impugned order was not passed in violation of natural justice. Issue 3: Appropriate Remedy and Further Course of Action Relevant legal framework and precedents: Section 107 of the CGST Act provides for an appellate remedy against orders passed by adjudicating authorities. The principle of exhaustion of alternative remedies before approaching the writ jurisdiction is well established. Court's interpretation and reasoning: Having found jurisdiction and procedural fairness, the Court directed the Petitioner to avail the statutory appellate remedy before the Appellate Authority under Section 107 of the CGST Act. The Court also clarified that if the appeal is filed within 30 days with the mandatory pre-deposit, it shall not be dismissed on limitation grounds and will be adjudicated on merits. Key evidence and findings: The Petitioner had already filed a reply and attended the hearing, indicating readiness to contest the matter on merits before the appellate forum. Application of law to facts: The Court emphasized the availability and adequacy of the appellate remedy and declined to interfere by writ jurisdiction at this stage. Treatment of competing arguments: The Petitioner's plea for writ relief based on jurisdictional and procedural objections was not accepted as the Court found these issues could be effectively addressed on appeal. Conclusions: The Court relegated the Petitioner to the appellate forum, keeping all contentions open for consideration there. 3. SIGNIFICANT HOLDINGS The Court held:
Core principles established include:
Final determinations on each issue were that the adjudicating authority had proper jurisdiction, the Petitioner was afforded a fair hearing, and the Petitioner must pursue the appellate remedy under Section 107 of the CGST Act. The writ petition was accordingly disposed of without interference in the impugned order.
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