Delhi HC grants extension until July 15, 2025 for GST appeal filing under Section 107 despite expired limitation period

Delhi HC permitted petitioner to file appeal under Section 107 of Central Goods and Service Tax Act, 2017 by July 15, 2025, with required pre-deposit, despite limitation period expiring. Case involved fraudulent ITC availment through goods-less invoices and validity of consolidated SCN under Section 74 covering multiple financial years. Court held appeal shall be decided on merits without limitation bar if filed within extended timeframe. Decision in Quest Infotech case will bind appellate proceedings regarding consolidated notices across multiple financial years.

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The core legal questions considered by the Court in this matter are:

1. Whether the show cause notice (SCN) issued to the Petitioner entity complied with the procedural requirements under the Central Goods and Service Tax Rules, 2017, specifically regarding the authority of the officer issuing the SCN and the issuance of a summary of the SCN as mandated by Rule 142(1)(a).

2. Whether the SCN was issued without the mandatory pre-consultation as required under Rule 142(1A) of the Central Goods and Service Tax Rules, 2017.

3. The validity of issuing a consolidated SCN and consequent order covering multiple financial years.

4. Whether the writ petition challenging the impugned order is maintainable, given the availability of an alternate statutory remedy under Section 107 of the Central Goods and Service Tax Act, 2017.

5. The broader issue of whether the Petitioner's alleged issuance of goods-less invoices to fraudulently avail Input Tax Credit (ITC) justifies interference by the Court in exercise of writ jurisdiction.

Issue-wise Detailed Analysis:

1. Compliance with Procedural Requirements under CGST Rules (Authority and Summary of SCN)

The Petitioner contended that the SCN was issued and signed by an officer who lacked the authority to do so, and that the summary of the SCN, as required under Rule 142(1)(a) of the CGST Rules, 2017, was not issued. This procedural challenge questioned the validity of the impugned order.

The Court examined the relevant statutory provisions and noted that Rule 142(1)(a) mandates issuance of a summary of the SCN by the proper officer. However, the Court found no established violation of this requirement in the present case. The Department had complied with principles of natural justice by serving notice and providing opportunity for personal hearing. The Court emphasized that mere procedural irregularities, if any, must be shown to have caused prejudice, which was not demonstrated here.

The Court relied on established precedents which hold that procedural lapses do not vitiate orders if the principles of natural justice are complied with and the officer acts within jurisdiction.

2. Absence of Pre-Consultation under Rule 142(1A)

The Petitioner argued that the SCN was issued without pre-consultation as mandated by Rule 142(1A) of the CGST Rules, 2017. This rule requires pre-consultation with the Commissioner before issuance of SCN in certain cases.

The Court observed that the Petitioner did not establish that such pre-consultation was mandatory in the facts of this case or that its absence caused any prejudice. The Court noted that the principles of natural justice were fully complied with during adjudication. The Court did not find merit in this contention and held that failure to conduct pre-consultation, if any, was not a ground to interfere with the impugned order under writ jurisdiction.

3. Validity of Consolidated SCN and Order Covering Multiple Financial Years

The Petitioner challenged the issuance of a consolidated SCN and the consequent order covering multiple financial years. This issue was noted to be under consideration by the Court in a separate writ petition (Quest Infotech Pvt. Ltd. case).

The Court refrained from expressing any definitive view on this issue in the present matter and observed that the decision in the Quest Infotech case, once delivered, would bind the appellate proceedings if the Petitioner chooses to appeal. This approach was to avoid conflicting decisions and to maintain consistency in adjudication.

4. Maintainability of Writ Petition in Presence of Alternate Remedy under Section 107 CGST Act

The Respondent contended that the impugned order is appealable under Section 107 of the CGST Act, 2017, and that the Petitioner should pursue the statutory appellate remedy rather than approach the Court under writ jurisdiction.

The Court extensively relied upon the Supreme Court decision in the Commercial Steel Limited case, which clarified that writ petitions challenging orders under the CGST Act are maintainable only in exceptional circumstances such as breach of fundamental rights, violation of natural justice, excess of jurisdiction, or challenge to the vires of the statute.

In the present case, none of these exceptions were established. The Court found no violation of natural justice as the Petitioner was given notice and opportunity for hearing. The Court noted that the statement of one of the Petitioner's directors admitting issuance of goods-less invoices was on record, reinforcing the factual basis of the Department's case.

The Court held that factual disputes and assessment of evidence are to be adjudicated by the appellate authority and not in writ jurisdiction. The Court emphasized that the availability of a full-fledged statutory remedy under Section 107 precluded interference by writ jurisdiction.

5. Allegations of Fraudulent Availment of ITC and Impact on GST Regime

The Court recognized the serious nature of the allegations against the Petitioner involving issuance of goods-less invoices to fraudulently avail ITC amounting to Rs. 1,85,73,718/-. The Court noted that misuse of the ITC facility strikes at the root of the GST regime, which is designed to facilitate ease of doing business by allowing credit of input tax paid.

The Court referred to its earlier decision in Mukesh Kumar Garg vs. Union of India, which highlighted the detrimental impact of fraudulent ITC claims on the exchequer and the GST system. That decision underscored that writ jurisdiction should not be exercised to support unscrupulous litigants and that factual issues must be decided by the appropriate appellate forums.

The Court observed that the Petitioner and connected entities were alleged to have floated various firms solely to avail ITC without actual supply of goods or services. Given the complexity and factual matrix, the Court declined to interfere in writ jurisdiction.

Additional Observations and Directions

The Court granted liberty to the Petitioner to file an appeal under Section 107 of the CGST Act by 15th July, 2025, allowing necessary pre-deposit as mandated. The Court clarified that the appeal would be adjudicated on merits and would not be dismissed on limitation grounds.

The Court also clarified that any observations made in the present order would not affect the final adjudication by the appellate authority.

Significant Holdings:

"The existence of an alternate remedy is not an absolute bar to the maintainability of a writ petition under Article 226 of the Constitution. But a writ petition can be entertained in exceptional circumstances where there is: (i) a breach of fundamental rights; (ii) a violation of the principles of natural justice; (iii) an excess of jurisdiction; or (iv) a challenge to the vires of the statute or delegated legislation."

"In the present case, none of the above exceptions was established. There was, in fact, no violation of the principles of natural justice since a notice was served on the person in charge of the conveyance. In this backdrop, it was not appropriate for the High Court to entertain a writ petition."

"The entire concept of Input Tax Credit, as recognized under Section 16 of the CGST Act is for enabling businesses to get input tax on the goods and services which are manufactured/supplied by them in the chain of business transactions. The said facility... is a major feature of the GST regime, which is business friendly and is meant to enable ease of doing business."

"It is observed by this Court in a large number of writ petitions that this facility under Section 16 of the CGST Act has been misused by various individuals, firms, entities and companies to avail of ITC even when the output tax is not deposited or when the entities or individuals who had to deposit the output tax are themselves found to be not existent. Such misuse, if permitted to continue, would create an enormous dent in the GST regime itself."

"The persons, who are involved in such transactions, cannot be allowed to try different remedies before different forums, inasmuch as the same would also result in multiplicity of litigation and could also lead to contradictory findings of different Forums, Tribunals and Courts."

"The impugned order is an appealable order under Section 107 of the CGST Act... The contentions that the Petitioner wishes to raise can always be raised in appeal."

In conclusion, the Court refused to entertain the writ petition on merits, holding that the Petitioner must pursue the statutory appellate remedy. The Court emphasized the importance of safeguarding the GST regime against fraudulent ITC claims and the necessity of factual adjudication by the designated appellate authorities rather than through writ jurisdiction. The Petitioner was permitted to file an appeal within an extended timeline with the requisite pre-deposit, ensuring the matter would be adjudicated on merits by the competent forum.

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