2025 (12) TMI 1661 - HC - GST

GST input tax credit fraud allegations and disputed invoices: writ refused; appeal allowed by 31.01.2026 without time-bar.

In a challenge to a GST order alleging fraudulent availment of ITC, the HC held that writ jurisdiction is ordinarily not exercised in such matters because ... Fraudulent availment of ITC - impugned order was passed without affording a personal hearing to petitioner - violation of principles of natural justice - HELD THAT:- This Court has perused the SCN, the reply filed by the Petitioners to the SCN and the impugned order. A perusal of the reply filed by the Petitioners dated 30th August, 2024 would show that the Petitioners have not stated anything on merits. No details have been given as to what were the nature of the goods that were supplied and how the Petitioners were having any bonafide transactions with the other entities to whom the SCN was issued. The reply filed by the Petitioners is ambiguous, to say the least and fails to deal with the allegations in the SCN. This Court has consistently taken the view that in cases involving fraudulent availment of ITC, ordinarily, the Court would not be inclined to exercise its writ jurisdiction. It is routinely seen in such cases that there are complex transactions involved which require factual analysis and consideration of voluminous evidence, as also detailed orders passed after investigation by the Department. In such cases, it would be necessary to consider the burden on the exchequer as also the nature of impact on the GST regime, and balance the same against the interest of the Petitioners, which is secured by availing the right to statutory appeal. At this stage, it is also relevant to note that the impugned order is stated to have been received by the Petitioners in the first week of February, 2025 itself. However, the writ petitions were filed sometime between August, 2025 to November, 2025, which is beyond the period of limitation available for filing an appeal. Despite this position, the Court has queried the Petitioners’ counsels as to whether they wish to avail of the appellate remedy to approach the Commissioner (Appeals) in this matter. However, the Petitioner, who is present in Court, submits that he would not be able to make the pre-deposit for the purpose of filing an appeal. Be that as it may, in the opinion of this Court, the Petitioners are free to take all the contentions which they wish to raise before the Appellate Authority. Given that the time for filing the appeal assailing the impugned order has already lapsed, the Court is inclined to give the opportunity to the Petitioners to file the appeal - If the Appeal is filed by the Petitioners along with the requisite pre-deposit by 31st January, 2026, the same shall not be dismissed on the ground of limitation and shall be adjudicated on merits. Petition disposed off. 1. ISSUES PRESENTED AND CONSIDERED (i) Whether the Court should exercise writ jurisdiction to set aside the adjudication order alleging fraudulent availment of Input Tax Credit, when the order is appealable and involves disputed facts requiring detailed factual examination. (ii) Whether the adjudication order was vitiated for breach of principles of natural justice on the ground of non-grant of personal hearing, so as to justify interference in writ jurisdiction. (iii) Whether, despite lapse of the statutory appeal period, the Petitioners should be granted time to file a statutory appeal on condition of making the requisite pre-deposit, with a direction that the appeal not be rejected as time-barred. 2. ISSUE-WISE DETAILED ANALYSIS Issue (i): Maintainability of writ petition in fraudulent ITC cases where statutory appeal lies Legal framework: The Court treated the impugned adjudication order as an appealable order and proceeded on the basis that an appellate remedy is available under the CGST framework. It also applied the settled approach that writ jurisdiction is discretionary and ordinarily not exercised where disputed facts and complex transactions require appreciation of evidence, particularly in matters alleging fraudulent availment of ITC and significant impact on the exchequer. Interpretation and reasoning: The Court found that the allegations concern a 'complex maze of transactions' and would require factual analysis and consideration of evidence not suited for writ adjudication. It emphasised the need to balance the burden on the exchequer and the impact on the GST regime against the Petitioners' interests, which are protected by the statutory appellate process. The Court therefore declined to entertain the writ petitions and held that the proper course is to pursue the statutory appeal. Conclusion: The Court refused to exercise writ jurisdiction and relegated the Petitioners to the statutory appellate remedy, holding that such matters are ordinarily not to be examined in writ proceedings. Issue (ii): Alleged denial of personal hearing and violation of natural justice Legal framework: The Court recognised that personal hearing is 'usually' required and examined the natural justice objection in the context of whether it warranted writ interference. It evaluated the record including service of the show cause notice, filing of reply, and the adjudication order's recording of personal hearing opportunities. Interpretation and reasoning: Although the Department could not trace dispatch proof of hearing notices, the Court declined to disbelieve the adjudication order's recording that multiple personal hearing dates were granted and that the noticees did not appear. The Court noted that the Petitioners were aware of investigation proceedings, the show cause notice was served, and a reply was filed. It also observed that the reply was ambiguous and did not address the allegations on merits. On this overall assessment, the Court held that there was overall compliance with principles of natural justice and that mere inability to produce dispatch proof did not, by itself, establish a denial of hearing warranting writ relief. Conclusion: The Court did not set aside the order on the ground of denial of personal hearing and held that the natural justice challenge did not justify writ interference. Issue (iii): Extension of time to file statutory appeal despite limitation having expired Legal framework: The Court considered that the impugned order had been received earlier and that the writ petitions were filed after the appeal limitation period had lapsed. It nevertheless examined whether an opportunity should be granted to file an appeal, subject to compliance with the pre-deposit requirement. Interpretation and reasoning: Even though the Petitioners stated difficulty in making the pre-deposit, the Court held they are free to raise all contentions before the Appellate Authority and, given that the appeal period had already expired, granted an opportunity to file the appeal within a specified time. The Court directed that if the appeal is filed with the requisite pre-deposit by the stipulated date, it shall not be dismissed on limitation and shall be adjudicated on merits. The Court also clarified that its observations would not impact adjudication on merits and left all rights and contentions open. Conclusion: The petitions were disposed of with liberty to file appeal by 31 January 2026 with the mandated pre-deposit, and the appeal was directed not to be rejected as time-barred if so filed, to be decided on merits.