2025 (8) TMI 315 - HC - GST

Order upholds that replies did not contest fraudulent ITC from nonexistent firms; consolidated SCNs valid; appeal by Aug 31, 2025

HC upheld the Adjudicating Authority's finding that the petitioner's replies did not prima facie contest investigations into fraudulent availment and ... Availment and further passing on of fraudulent ITC - ITC is based on invoices issued from non-existent or fake firms - non-consideration of the replies filed by the petitioner - violation of principles of natural justice - consideration of reply - Consolidated SCN for Multiple Financial Years. Consideration of the reply - HELD THAT:- The reply does not prima facie contest the investigation and the facts revealed therein. In a case of fraudulent availment of ITC or utilization of ITC, the best evidence for a person who is genuinely conducing a business would be to state the exact nature of the goods sold, the quantities purchased/sold, etc. There is, prima facie, no averment in the reply or the additional reply giving such details. Thus, the conclusion of the Adjudicating Authority cannot be held to be arbitrary or perverse. Consolidated SCN for Multiple Financial Years - HELD THAT:- The nature of ITC is such that fraudulent utilization and availment of the same cannot be established on most occasions without connecting transactions over different financial years. The purchase could be shown in one financial year and the supply may be shown in the next financial year. It is only when either are found to be fabricated or the firms are found to be fake that the maze of transactions can be analysed and established as being fraudulent or bogus - A solitary availment or utilization of ITC in one financial year may actually not be capable of by itself establishing the pattern of fraudulent availment or utilization. It is only when the series of transactions are analysed, investigated, and enquired into, and a consistent pattern is established, that the fraudulent availment and utilization of ITC may be revealed. The language in the abovementioned provisions i.e., the word ‘period’ or ‘periods’ as against ‘inancial year’ or ‘assessment year’ are therefore, significant. In the facts of this case, no prejudice is caused to the Petitioner if cross-examination is not afforded as all the documents relied upon by the Adjudicating Authority are those which have been recovered from the Petitioner’s premises itself and the Petitioner is well in the knowledge of the actual status of the purchasers and the suppliers - This Court has already taken a view that interference in such cases in writ jurisdiction is limited. The Court cannot go into analysis of facts in writ jurisdiction. It is well-settled in law that the High Court, despite being vested with wide and extensive powers under Articles 226 and 227 of the Constitution of India, must exercise such powers within the bounds of judicial discipline and established legal principles. The jurisdiction of the High Court does not extend to reappreciation of evidence or interference with factual findings recorded by the competent authorities. The High Court cannot assume the role of an Appellate Authority for adjudication of disputed questions of fact. The limitation for availing of the appellate remedy, however, has expired in terms of Section 107 of the CGST Act. Since the petition has remained pending before this Court since April 2025, the Petitioner is given time till 31st August, 2025 to file an appeal challenging the impugned order dated 23rd January 2025 along with the requisite pre-deposit. If the same is filed within the stipulated time, the appeal shall not be dismissed on the ground of being barred by limitation and shall be adjudicated on merits. Petition disposed off. Issues: (i) Whether the adjudicating authority failed to consider the petitioner's replies and violated principles of natural justice by refusing cross-examination; (ii) Whether a consolidated Show Cause Notice / adjudication for multiple periods/financial years under Section 74 of the CGST Act is permissible; (iii) Whether the writ petition under Article 226 is maintainable when an efficacious statutory appellate remedy under Section 107 exists and whether relief should be granted in writ jurisdiction.Issue (i): Whether the adjudicating authority failed to consider the petitioner's replies and whether refusal of cross-examination vitiates the impugned order.Analysis: The impugned order is a detailed adjudication recording hearings, replies filed on 19.12.2024 and 30.12.2024, and reasons for rejecting requests for cross-examination. The replies mostly raised technical objections and did not prima facie dispute the core investigative findings of absence of underlying supplies or provide substantive particulars of business transactions. Jurisprudence recognises that cross-examination in adjudicatory proceedings is not an unfettered right and is required only where denial would cause demonstrable prejudice. In the facts, the documents relied upon were recovered from the petitioner's premises and the petitioner had knowledge of relevant facts; no specific prejudice from denial of cross-examination was established.Conclusion: The petitioner's replies were considered and the refusal to permit cross-examination does not vitiate the impugned order; this issue is decided against the petitioner.Issue (ii): Whether a consolidated SCN / order for multiple periods (financial years) under Section 74 is impermissible.Analysis: Sections 73 and 74 use expressions such as 'for any period' and 'for such periods' and contemplate notices and statements covering periods beyond a single financial year; other provisions refer expressly to 'financial year' where applicable. The statutory language and practical nature of ITC fraud investigations, which often require connecting transactions across years to establish fraudulent patterns, support issuance of consolidated notices/orders. Precedent of this Court has accepted consolidated notices in similar contexts.Conclusion: A consolidated SCN and adjudication for multiple periods under the CGST Act is permissible; this issue is decided against the petitioner.Issue (iii): Whether the writ petition is maintainable when an alternate statutory remedy under Section 107 exists and whether exceptional circumstances justify exercise of writ jurisdiction.Analysis: The statutory scheme provides an effective appellate remedy under Section 107. Established principles limit exercise of writ jurisdiction where an efficacious alternate remedy exists unless exceptional circumstances (breach of fundamental rights, violation of natural justice with prejudice, excess of jurisdiction, or challenge to vires) are shown. The petitioner did not demonstrate such exceptional circumstances or substantial prejudice from procedural denials. The Court exercised discretion to decline writ relief but granted limited relief by extending time to file an appeal and permitting condonation of delay for limitation purposes.Conclusion: The writ petition is not maintainable and is dismissed; the petitioner is relegated to the appellate remedy under Section 107 subject to the time extension granted.Final Conclusion: The impugned adjudication order is not interfered with in writ jurisdiction; the petitioner is directed to file an appeal under Section 107 within the extended period and the writ petition is dismissed with costs.Ratio Decidendi: Where an effective statutory appellate remedy exists, writ jurisdiction will not be ordinarily exercised in tax adjudications absent exceptional circumstances; consolidated notices covering multiple periods are permissible under Sections 73 and 74 of the CGST Act, and denial of cross-examination vitiates an order only if the party demonstrates specific prejudice.