Challenge to summary order not barred by limitation but writ jurisdiction declined for ITC fraud matters

Delhi HC held that challenge to summary order was not barred by limitation. Regarding penalty levy beyond permissible limits under Section 122(1) of CGST Act, 2017, the court determined this ground could be raised in appeal. Citing precedent in M/S. SHEETAL AND SONS case involving similar issues with main firm SR Impex and SR International, the court held that writ jurisdiction would not be exercised for matters concerning fraudulent availment of Input Tax Credit. The impugned order being appealable under Section 107 of CGST Act, petitioners were directed to pursue appellate remedy before Appellate Authority. Court granted extension allowing appeals filed by July 15, 2025 with requisite pre-deposit under Section 107 to not be dismissed for limitation. Petition disposed of.

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ISSUES:

• Whether the issuance of the summary order in FORM GST DRC-07 dated 22nd February, 2025 is barred by limitation.
• Whether the penalty imposed exceeds the permissible limits prescribed under Section 122(1) of the Central Goods and Services Tax Act, 2017.
• Whether writ jurisdiction is appropriate in cases involving allegations of fraudulent availment of Input Tax Credit under the CGST Act.
• Whether the petitioners can be permitted to avail appellate remedy under Section 107 of the CGST Act despite the limitation period.

RULINGS / HOLDINGS:

• On limitation, the Court held prima facie that the issuance of the summary order in FORM GST DRC-07 is not barred by limitation, based on proof of service via email on registered addresses.
• Regarding penalty, the Court stated that the contention of penalty being imposed beyond permissible limits under Section 122(1) of the CGST Act is a ground that can be raised in appeal by the Petitioner.
• The Court reaffirmed that in cases involving fraudulent availment of Input Tax Credit, writ jurisdiction would not be liable to be exercised, consistent with prior rulings.
• The Court permitted the petitioners to avail the appellate remedy under Section 107 of the CGST Act, directing that if appeals are filed by the stipulated date with requisite pre-deposit, they shall not be dismissed as being barred by limitation and shall be adjudicated on merits.

RATIONALE:

• The Court relied on the statutory framework of the Central Goods and Services Tax Act, 2017, particularly Sections 107 and 122.
• Service of the impugned order by email to registered addresses was accepted as valid proof of communication, negating limitation objections at this stage.
• Precedent was followed wherein writ jurisdiction was declined in matters involving fraudulent Input Tax Credit claims, emphasizing the availability of statutory appellate remedies.
• The Court emphasized the principle that appellate authorities must decide appeals on merits without being influenced by interim observations, thereby ensuring procedural fairness.
• No dissent or doctrinal shift was noted; the decision aligns with established jurisprudence on limitation and appellate remedies under the CGST Act.

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