Petition Dismissed on GST Penalty Under Section 122(1)(ii) for Fraudulent Registration Use

The HC dismissed the petition challenging the levy of penalty under Section 122(1)(ii) of the CGST Act, 2017, relating to fraudulent use of a GST registration. The Court found contradictions in the petitioner's claims regarding the misuse of a second GSTIN and noted the petitioner's lack of follow-up on the investigation since 2019. The petition was held to be barred by limitation under Section 107 of the CGST Act, and the Court declined interference under writ jurisdiction, emphasizing the petitioner's responsibility to protect its identity. The petitioner was directed to file an appeal with the requisite pre-deposit by 31 August 2025 if it wished to pursue the matter further.

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ISSUES:

Whether penalty under Section 122(1)(ii) and Section 122(1)(vii) of the CGST Act, 2017 can be imposed for fraudulent availing and passing of input tax credit.Whether a petitioner can avoid penalty by claiming non-utilization and misuse of a second GST registration number allegedly obtained fraudulently.Whether the petitioner's failure to timely challenge the impugned order bars relief under writ jurisdiction.Whether the petitioner's conduct, including filing of FIR and follow-up on investigation, affects the entitlement to relief.Whether the petitioner can dispute the validity of the second GST registration on the basis of Aadhaar authentication and alleged misuse of mobile/email details.

RULINGS / HOLDINGS:

The penalty under Section 122(1)(ii) and Section 122(1)(vii) of the CGST Act, 2017 was upheld as the petitioner was found to have "passed the said credit fraudulently" and "availed the said credit fraudulently."The petitioner's claim that the second GSTIN was never utilized and was misused by an unknown individual was found to be contradictory and insufficient to negate liability, especially since the petitioner admitted to applying for two GST registrations.The Court held that the petitioner's failure to challenge the impugned order within the limitation period under Section 107 of the CGST Act, 2017 precludes relief under writ jurisdiction.The petitioner's casual approach in not seriously pursuing the FIR or investigation was noted, and it was held that the petitioner must take responsibility to ensure that his identity is not misused.The Court rejected the petitioner's contention based on Aadhaar authentication discrepancies, observing contradictions in the petitioner's case and absence of a factual inquiry to support the claim of fraudulent registration.

RATIONALE:

The Court applied the provisions of the CGST Act, 2017, specifically Sections 122(1)(ii), 122(1)(vii), and 107, alongside parallel provisions of the Delhi GST Act and the IGST Act, 2017.The legal framework mandates imposition of penalty for fraudulent availment and passing of input tax credit, which was supported by the record including admission of two GST registrations by the petitioner.The Court emphasized the importance of limitation under Section 107 of the CGST Act, 2017, holding that delay in challenging the order bars writ relief.The Court noted the absence of diligent follow-up on the FIR and investigation by the petitioner, reflecting on the principle that a party must take reasonable steps to protect its legal rights and prevent misuse of identity.No dissent or doctrinal shift was indicated; the decision adhered to established statutory interpretation and procedural requirements under the GST laws.

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