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of <h1>HC upholds fraud findings on fake ITC invoices, allows appeal with pre-deposit by August 31, 2025</h1> <h3>Ambika Traders Through Proprietor Gaurav Gupta Versus Additional Commissioner, Adjudication DGGSTI, CGST Delhi North.</h3> Ambika Traders Through Proprietor Gaurav Gupta Versus Additional Commissioner, Adjudication DGGSTI, CGST Delhi North. - 2025:DHC:6181 - DB ISSUES: Whether the non-consideration of the replies filed by the petitioner to the Show Cause Notice (SCN) amounts to violation of principles of natural justice and statutory mandate under Section 74(9) of the CGST Act.Whether issuance of a consolidated SCN and demand for multiple financial years under Section 74 of the CGST Act is permissible.Whether denial of opportunity for cross-examination of witnesses/officers in adjudication proceedings under the CGST Act violates principles of natural justice.Whether the impugned adjudication order travels beyond the grounds specified in the SCN, thereby violating Section 75(7) of the CGST Act.Whether the writ jurisdiction under Articles 226 and 227 of the Constitution is maintainable in presence of an efficacious statutory appellate remedy under Section 107 of the CGST Act.Whether the petitioner is liable for disallowance of Input Tax Credit (ITC), interest, and penalty on account of fraudulent availment and utilization of ITC under the CGST Act. RULINGS / HOLDINGS: The Court held that the replies filed by the petitioner were duly considered by the Adjudicating Authority as reflected in the detailed impugned order, and non-acceptance of the petitioner's submissions does not amount to non-consideration or violation of natural justice.The issuance of a consolidated SCN covering multiple financial years under Section 74 of the CGST Act is permissible, as the statutory language contemplates notice for 'any period' or 'such periods' and does not restrict to a single financial year.The denial of cross-examination in SCN adjudication proceedings is not an unfettered right; such opportunity is warranted only if the party demonstrates that prejudice would be caused by denial thereof. In the present case, no such prejudice was shown, and denial of cross-examination was held not to violate natural justice.The impugned order does not travel beyond the grounds specified in the SCN; demands of tax, interest, and penalty under Sections 74 and 122 of the CGST Act were within the scope of the SCN.The writ petition is not maintainable in presence of an efficacious statutory remedy under Section 107 of the CGST Act, except in cases involving breach of fundamental rights, violation of natural justice, excess of jurisdiction, or challenge to vires of legislation, none of which are established here.The petitioner was held liable for disallowance of ITC amounting to Rs. 83,76,32,528/-, along with interest and penalty under Sections 74, 50, and 122 of the CGST Act, on the basis of findings that ITC was fraudulently availed and utilized through non-existent/fake supplier firms and suppression of facts. RATIONALE: The Court applied the statutory framework of the CGST Act, particularly Sections 73, 74, 75, 107, 122, 137, and 155, and relevant rules of natural justice. Section 74(9) mandates consideration of representations before passing an order, which was satisfied as per the impugned order's detailed analysis.The Court relied on the statutory language of Sections 73(3), 73(4), 74(3), and 74(4) of the CGST Act, which allow notices for 'any period' or 'such periods,' supporting issuance of consolidated SCNs for multiple years, especially in complex fraudulent ITC cases involving interconnected transactions.The Court referred to precedents emphasizing that cross-examination is not an absolute right in quasi-judicial proceedings and is warranted only upon demonstration of prejudice, citing decisions including HIM Logistics Pvt. Ltd., Flevel International, and the principle that SCN proceedings cannot be converted into mini-trials.The Court underscored the principle that the High Court's writ jurisdiction under Articles 226 and 227 is supervisory and not appellate, and that reappreciation of facts or evidence is impermissible, referencing Supreme Court rulings including Shamshad Ahmad v. Tilak Raj Bajaj and Titaghur Paper Mills Co. Ltd. v. State of Orissa.The Court highlighted the availability of an efficacious statutory remedy under Section 107 of the CGST Act, which bars writ interference unless exceptional circumstances exist, reaffirmed by Supreme Court decisions including The Assistant Commissioner of State Tax v. M/s Commercial Steel Limited and Radha Krishan Industries v. State of H.P.The Court noted the large-scale governmental enforcement against bogus ITC claims, including official circulars and parliamentary disclosures, establishing the context and necessity of stringent action against fraudulent ITC claims, thereby supporting the Adjudicating Authority's findings.The Court emphasized the principle that petitioners invoking writ jurisdiction must come with clean hands and candidly disclose all material facts, citing K.D. Sharma v. SAIL and Ramjas Foundation v. Union of India, to justify refusal of writ relief in absence of such conduct.Acknowledging the expiry of limitation for appeal under Section 107, the Court granted time to file appeal with pre-deposit, preserving the petitioner's right to statutory remedy and ensuring adjudication on merits by the Appellate Authority.
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