Fraudulent Input Tax Credit investigations: consolidation of SCNs for multiple years permissible and can be upheld if necessary to expose illicit schemes

Consolidation of show cause notices and orders for multiple financial years is permissible in cases alleging fraudulent availment of input tax credit where transactions span years; the legislations language does not prohibit consolidated SCNs and consolidation may be necessary to expose the illegal modus operandi, and therefore no jurisdictional error arises. Several factual issues in such ITC fraud allegations require detailed adjudication in appropriate proceedings rather than by writ, and non-receipt of personal hearing notices did not, on the material, amount to a breach of principles of natural justice sufficient to invalidate the impugned consolidated order.

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ISSUES PRESENTED AND CONSIDERED

1. Whether service of personal hearing notices by e-mail to the e-mail address furnished at the time of GST registration constitutes valid service under Section 169(1)(c) of the CGST Act and suffices for issuance of an order under the Act.

2. Whether the concept of "deemed service" under Section 169(2) limits issuance of an order to only those modes of service specifically described as constituting deemed service, thereby affecting the validity of service by e-mail for the purpose of limitation and issuance of orders under Section 74(10)/73(10).

3. Whether a consolidated show cause notice (SCN) and consolidated order covering multiple financial years is permissible under Sections 73 and 74 of the CGST Act in cases involving alleged fraudulent availment/utilisation of Input Tax Credit (ITC).

4. Whether there was a violation of principles of natural justice where the petitioner alleged non-receipt of personal hearing notices, in light of departmental documents showing e-mails to the registered e-mail address on the GST portal, and whether suppression/non-pleading of material facts warrants dismissal with costs.

ISSUE-WISE DETAILED ANALYSIS

Issue 1 - Validity of e-mail service under Section 169(1)(c)

Legal framework: Section 169(1) prescribes modes of service of decisions, orders, summons, notices or other communications under the Act, including sub-clause (c) "by sending a communication to his e-mail address provided at the time of registration or as amended from time to time."

Precedent Treatment: The Court referred to its recent view in W.P. (C) 4374/2025 (Rishi Enterprises) where communication by e-mail was held sufficient. The petitioner relied upon an Income Tax decision concerning notice to a Chartered Accountant, which the Court distinguished on statutory language differences.

Interpretation and reasoning: The GST portal record showed that the e-mail address used was the registered e-mail of the proprietor (authorised signatory), not merely a practitioner's address; the departmental e-mails were sent to that address. The Court emphasised the plain language of Section 169(1)(c), construing sending to the registered e-mail as adequate service. The Court rejected the petitioner's contention equating notices to a Chartered Accountant under a different statute with service under Section 169(1)(c) of the CGST Act.

Ratio vs. Obiter: Ratio - Sending communication to the e-mail address provided at registration under Section 169(1)(c) constitutes valid service for issuance of an order under the Act. Distinguishing observations regarding the Income Tax decision are obiter to the extent they comment on statutory language differences.

Conclusion: Service by e-mail to the registered e-mail address on the GST portal constituted valid service of personal hearing notices in the present matter.

Issue 2 - Relationship between "issuance of order" and "deemed service" under Section 169(2)

Legal framework: Section 169 sets out modes of service and Section 169(2) provides for "deemed service" in particular circumstances; Rule 142 (referenced) uses the expression "summary of the order issued" under Section 74.

Precedent Treatment: The Court relied on its analysis in W.P. (C) 4374/2025 for interpretive guidance on issuance vs. deemed service.

Interpretation and reasoning: The Court drew a distinction between (a) issuance of an order by any of the prescribed modes in Section 169(1), and (b) deemed service as a statutory fiction applicable to certain modes under Section 169(2). It held that issuance of an order does not require that the mode used be one that attracts the deeming fiction; issuance by email suffices even if deemed service is not statutorily provided for that mode. The Court linked this interpretation to the scheme of Sections 74/73 and the requirement of issuance for limitation purposes (e.g., Section 74(10)).

Ratio vs. Obiter: Ratio - The issuance of an order may be effected by any mode specified in Section 169(1), and such issuance is distinct from the statutory concept of "deemed service" under Section 169(2); therefore email service can constitute issuance even where deemed service is not invoked. Commentary on interplay with Rule 142 is explanatory (supporting ratio).

Conclusion: The petitioner's argument that only modes attracting "deemed service" can constitute issuance of an order is rejected; e-mail service fulfills the statutory requirement for issuance of an order.

Issue 3 - Permissibility of consolidated SCNs/orders for multiple financial years in fraudulent ITC cases under Sections 73 and 74

Legal framework: Sections 73 and 74 govern determination of tax not paid/erroneously refunded/ITC wrongly availed or utilised; subsections (3)-(4) permit service of statements "for any period" or "for such periods," whereas subsections (10) refer to issuance of orders within specified periods from the due date of furnishing of the annual return for the financial year to which the tax relates.

Precedent Treatment: The petitioner relied on sales tax decisions (Bennet & White; Caltex) and a High Court decision (Titan Co.) addressing "bunching" of SCNs; the Court distinguished those authorities as inapposite because they arose in different statutory contexts (sales tax) or under a different provision (Section 73 interpretation in other contexts). The Court also relied upon its earlier decision in Ambika Traders (W.P.(C) 4853/2025), which upheld consolidated notices and orders in fraudulent ITC cases.

Interpretation and reasoning: The Court analysed statutory language, noting deliberate legislative choices: Sections 73(3)/(4) and 74(3)/(4) employ "for any period"/"for such periods," enabling notices/statements across periods; the limitation provisions (73(10)/74(10)) use "financial year," but this does not preclude notices covering multiple periods in fraud investigations. The Court reasoned that fraudulent availment/utilisation of ITC often requires tracing transactions across tax periods and financial years to establish patterns of bogus supplies, fabricated firms, or systematic misuse; thus consolidated SCNs/orders may be necessary and permissible. The Court found the sales-tax precedents distinguishable because they concerned discrete assessable items easily dissectible by period, whereas fraudulent ITC investigations are fact-driven and may necessarily span periods.

Ratio vs. Obiter: Ratio - In cases involving allegations of fraudulent availment/utilisation of ITC where transactions and fabricated schemes span multiple periods/financial years, issuance of consolidated SCNs and consolidated orders for multiple years is permissible under the statutory scheme of Sections 73 and 74. Distinguishing of older sales tax authorities is ratio to the extent necessary for application here; observations on legislative history and policy (ITC mechanism aims) are explanatory but support the ratio.

Conclusion: Consolidated SCNs/orders across financial years are tenable in fraudulent ITC cases; the language of the statute and the practical nature of ITC fraud validate such consolidation.

Issue 4 - Natural justice, pleading duty, suppression of material facts and costs

Legal framework: Principles of natural justice require opportunity of personal hearing; writ relief under Articles 226/227 permits interference where jurisdictional error or natural justice violation is established. Parties are duty-bound to plead relevant facts in writ petitions.

Precedent Treatment: The Court relied on its own prior findings demonstrating that email communication to the registered address sufficed; the petitioner's reliance on non-receipt was tested against departmental evidence.

Interpretation and reasoning: The Court found that the departmental record established that personal hearing notices were sent to the petitioner's registered e-mail; the writ petition did not plead that notices were received on that registered e-mail nor disclose material facts about the registered email being that of the proprietor. After departmental proof of emails, the petitioner shifted contention to the emails being to a Chartered Accountant, which the Court held was incorrect given portal data. The Court concluded there was no breach of natural justice and that material facts were concealed, amounting to conduct warranting dismissal with costs.

Ratio vs. Obiter: Ratio - Where departmental records show service to the registered e-mail and the petitioner fails to plead or discloses material facts, a contention of non-service will not succeed; concealment of material facts may justify dismissal and imposition of costs. Observations on duty to plead and conduct are integral to the determination (ratio) in this matter.

Conclusion: No violation of natural justice occurred; the petition failed to disclose/materially misrepresented facts regarding receipt and registration of the e-mail address, justifying dismissal and imposition of costs upon the petitioner.

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