Fake input tax credit allegations and consolidated show-cause notice across multiple years-writ challenge rejected for no reply, appeal available.

The dominant issue was whether writ jurisdiction should be exercised to quash adjudication alleging fraudulent availment of fake ITC on grounds of breach of natural justice, invalid consolidated SCN, and lack of jurisdiction. The HC held that non-filing of a reply to the SCN despite knowledge of the investigation disentitled the petitioner to invoke natural justice, and service of personal hearing notices by email to the registered address was duly effected; the contrary plea was found false. It further held that a consolidated SCN covering multiple financial years is permissible under the CGST Act, and that in multi-noticee matters adjudicatory jurisdiction lies with the commissionerate linked to the highest proposed demand, consistent with the relevant circular. Given the fact-intensive nature of fake ITC disputes and availability of statutory appeal, the writ was dismissed with exemplary costs.

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1. ISSUES PRESENTED AND CONSIDERED

(i) Whether a writ petition should be entertained to challenge a show cause notice and an appealable adjudication order in a case alleging fraudulent availment of ITC, when a statutory appellate remedy under Section 107 of the CGST Act is available.

(ii) Whether issuance of a consolidated show cause notice covering multiple financial years, in relation to alleged wrongful/fraudulent ITC availment, is permissible.

(iii) Whether the impugned show cause notice/order were vitiated for not separately delineating year-wise tax demands, despite the accompanying material.

(iv) Whether personal hearing notices were duly served when emailed to the registered email address reflected on the GST portal, and the plea of non-receipt could be accepted.

(v) Whether the adjudication by the Superintendent of Central Tax (Range/Division specified in the order) suffered from lack of jurisdiction in a multi-noticee matter, considering the basis on which adjudicating authority is fixed.

2. ISSUE-WISE DETAILED ANALYSIS

Issue (i): Entertainability of writ petition despite statutory appeal under Section 107 in fraudulent ITC matters

Legal framework: The Court examined the existence of an appellate remedy under Section 107 of the CGST Act and the Court's approach to exercise of extraordinary writ jurisdiction in matters involving allegations of fraudulent ITC.

Interpretation and reasoning: The Court held that the dispute arose from allegations of large-scale fraudulent availment of ITC involving complex transactions and factual evaluation, ordinarily unsuitable for adjudication under Article 226. The Court emphasized that, where an appealable order exists and the matter involves detailed factual inquiry based on investigation, writ jurisdiction should not be invoked as a substitute for statutory appeal. The Court also noted that the petitioner did not file a reply to the show cause notice and did not attend the personal hearing, undermining the basis for invoking writ jurisdiction.

Conclusions: The Court declined to entertain the writ petition on merits, holding that writ jurisdiction ought not to be exercised in such fraudulent ITC matters and that the petitioner should pursue the statutory appellate remedy. However, as an exceptional indulgence, time was granted to file an appeal by a specified date, with pre-deposit, and the appeal was directed to be decided on merits without dismissal on limitation.

Issue (ii): Validity of consolidated show cause notice for multiple financial years

Legal framework: The Court considered whether a consolidated notice for multiple financial years is permissible in the context of wrongful/fraudulent ITC matters, and treated the question as settled by binding Court precedent referred to and applied.

Interpretation and reasoning: The Court held that the permissibility of consolidated SCNs for multiple years stood settled and, accordingly, rejected the challenge asserting that a notice spanning multiple years is impermissible.

Conclusions: The Court conclusively held that issuance of a consolidated SCN covering multiple years was legally permissible and the petitioner's objection on this ground was untenable.

Issue (iii): Whether demands were not separately reflected year-wise

Legal framework: The Court examined the contents of the material accompanying the show cause notice (including the DRC-01 particulars placed before it) to determine whether year-wise figures were specified.

Interpretation and reasoning: The Court found that the DRC-01 accompanying the show cause notice specifically set out the amounts for different financial years separately. On facts, the Court recorded that the demand for one financial year and the demand for the subsequent financial year were distinctly reflected, contradicting the petitioner's claim of non-delineation.

Conclusions: The Court rejected the plea that year-wise tax amounts were not delineated, holding the objection to be completely untenable.

Issue (iv): Service of personal hearing notices and effect of email sent to registered email address

Legal framework: The Court examined whether communications for personal hearing were served when emailed to the registered email address appearing on the GST portal.

Interpretation and reasoning: On the basis of the personal hearing notices and email details produced, the Court found that the notices were emailed on specific dates and times to the email address that was shown as the registered email of the proprietor on the GST portal. The Court held that once the email is sent to the registered email address, compliance as to service is effected. It further held that the record left "no manner of doubt" that notices were served and characterised the petitioner's plea of non-service as false, also treating it as concealment of material facts relating to service of communications.

Conclusions: The Court conclusively held that personal hearing notices were duly served and rejected the petitioner's non-receipt contention as false, contributing to dismissal with exemplary costs.

Issue (v): Jurisdiction/competence of adjudicating authority in a multi-noticee case

Legal framework: The Court considered the rationale for centralized adjudication in cases involving multiple noticees and relied on the approach described in the circular placed before it to determine how adjudicating authority is fixed when multiple parties are involved.

Interpretation and reasoning: The Court accepted the explanation that where a very large number of noticees are involved, adjudication cannot practically be undertaken division-wise for each noticee, and the adjudicating authority is fixed based on the jurisdiction linked to the highest amount of proposed demand and the manner in which investigation proceeded. The Court held that in multi-noticee matters, adjudication cannot be split across different commissionerates and must be anchored to the determined jurisdiction for consolidated handling.

Conclusions: The Court rejected the jurisdictional challenge and upheld the competence of the adjudicating setup adopted for the multi-noticee adjudication.

Final outcome tied to decided issues

The writ petition was dismissed as not warranting interference under Article 226, all grounds were held meritless, and exemplary costs were imposed for concealment/false plea regarding service. Nevertheless, the Court permitted filing of a statutory appeal by a specified date with pre-deposit, directing that it be decided on merits without dismissal for limitation.

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