TaxTMI 
TaxTMI 
FILING OF APPEAL UNDER GST ACT BY ‘ANY PERSON’ OTHER THAN A ‘TAXABLE PERSON’
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....ILING OF APPEAL UNDER GST ACT BY ‘ANY PERSON’ OTHER THAN A ‘TAXABLE PERSON’<br>By: - DR.MARIAPPAN GOVINDARAJAN<br>Goods and Services Tax - GST<br>Dated:- 31-5-2025<br>In GURUDAS MALLIK THAKUR AND DINESH KUMAR RAGHAV VERSUS COMMISSIONER OF CENTRAL GOODS AND SERVICE TAX & ANR. - 2025 (5) TMI 227 - DELHI HIGH COURT, Delhi High Court, decided on 23.04.2025, the two petitioners filed the above writ petitions challenging the order-in-original, dated 23.01.2025 which based on the show cause notice dated 21.04.2023. Both the petitioners are stated to be the directors of one company 'Planman HR Private Limited, engaging the business of man power recruitment. An investigation was conducted by the Department against the petitioner....
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....s. The investigation report revealed that the petitioners wrongfully availed the CENVAT credit to the extent of Rs.22.41 crores. The petitioner Gurudas Malik Thakur was arrested for making false entries in the service tax returns on 21.08.2020. The Department also analysed the service tax returns as well as GST returns. The Department found that the petitioners filed the GSTR-1 only up to February 2019 and GSTR 3B was filed only up to December 2018. The Department called for filing further returns by the petitioners and the company. It was also found that one Arindam Chaudhary, who was the promoter and 90% shareholder of the company, was the decision maker in the company. The Department recorded the statements....
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.... of both the petitioners. Then the Department called upon documentary evidences as required and balance sheets of the company. On reviewing the same the Department found that there was short payment of GST by the company to the tune of Rs.40.61 crores. Inadmissible input tax credits were availed by the company. The Department directed the company to produce the copies of the bills and debit notes but the same have not been produced to the Department. The petitioners contended that they have resigned from the company. The petitioners have also stated that Varun Khanna was Chief Executive Officer of the company. The Adjudicating Authority considered the said issues and passed the order-in-original wh....
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....ich was challenged in the present writ petition. The Adjudicating Authority held that the demand raised are to be payable by the company and the two directors. The Adjudicating Authority also confirmed the interest payable to the tune of Rs.17.23 lakhs. The Adjudicating Authority imposed penalty of Rs.25000/- to Arindam Chaudhary, Gurudas Malik Thakur under Section 125 of the Act. The Adjudicating Authority further imposed penalty on Arindam Chaudhary, Gurudas Malik Thakur, Varun Khanna and Dinesh Kumar Raghav to the tune of Rs.35.42 crores under Section 122(1A) of the Act. The petitioners, before the High court, contended that both of them are not taxable persons and therefore the levy of GST and penalties wi....
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....ll not arise. The petitioners relied on some High Court judgments and prayed to quash the impugned order since they are not taxable persons. Verma contended that the petitioners have also availed the benefit on the wrong availment of the ineligible input tax credit and non-filing the required returns. The High Court considered the submissions of the parties to the petitions. The High Court framed the question as to whether and in what manner the Petitioners benefitted from availing the fake input tax credit or from the non-filing of GST returns cannot be gone into in the present writ petition. The High Court observed that the petitioners were the directors of the company. The High Court was of the....
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.... view that the following are to be decided by the Appellate Authority- * The exact role that the Petitioners played in the said company. * The control and management that the Petitioners exercised as also whether they derived any benefit would be a question that would have to be factually ascertained on the basis of the records. The High Court was of the view that the impugned order is clearly an appealable order under Section 107 of the CGST Act. The petitioners contended that the petitioners, being non taxable persons could not file appeal before the First Appellate Authority. The High Court analysed the provisions of Section 107 of the CGST Act. The High Court observed that Section 107 of the CGST Act starts ....
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....with the expression 'any person'. Thus, the filing of appeal is permissible by any person and not merely by a taxable person. The statements which have been recorded by the directors i.e., the petitioners show that each of them is trying to shrug off their responsibility. In the opinion of this Court, the matter requires closer scrutiny on facts by the Appellate Authority as to who was responsible for running the company and who was taking decisions including relating to generation of invoices, making payments, etc. The said subject is beyond the scope of the writ jurisdiction of the High Court. Next the High Court considered as to whether penalties can be imposed on any person under Section 122(1A) and 125 of the CGST Act.&....
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....nbsp; For this purpose, the High Court analysed the provision of Section 2(84) which defines the term 'person'. Section 2(84), the High Court observed that the said section would show that the same includes an individual without any limitations and makes a clear distinction between the taxable person and any person. The High Court further observed that the purpose Section 122(1A) of the CGST Act is clearly to make persons who may be responsible for having created bogus invoices and having utilised input tax credit without the receipt of goods and services and for distributing ITC in contravention of Section 20 of the CGST Act. It can be seen that the manner in which companies' function is that there is a management who would be takin....
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....g the decisions on behalf of taxable persons. These companies being inanimate, the responsibility has, by the wisdom of the legislature, been fixed under Section 122(1A) of the CGST Act upon any person who retains the benefits of a transaction. The Directors of a company and others who manage such companies owe a responsibility to ensure that companies do not engage in such fraudulent activity for availment of input tax credit without actual supply of goods, distribution of input tax credit to persons who have raised fake invoices and non-filing of GST returns. The impugned order clearly reveals that in various places the Petitioners as also the other two persons i.e. Mr. Arindam Chaudhary and Mr. Varun Khanna are clearly....
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.... not owning up the responsibility as to who took the decisions in respect of the availment of input tax credit and non-filing of the GST returns. Therefore, the High Court held that the impugned order can be clearly appealed against by the Petitioners, who were directors of the company. The petitioners contended that Section 122(1A) came into effect from 01.01.2021. At that time the petitioners were not the directors of the company. The High Court was of the opinion that this submission can be canvased before the Appellate Authority by establishing as to when the petitioners exited the company and whether they continued to exercise any managerial control even thereafter or not. The High Court also held that the sinc....
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....e the petitioners are stated to be non-taxable persons and have been imposed penalties by the impugned order, a mechanism would have to be created or made available by the Department to enable the petitioners to file the appeals. The High Court directed the Department to communicate to the petitioners within two weeks the mechanism in which they can avail of their appellate remedies. Upon receiving the intimation, the petitioners shall file the appeal within 30 days. The High Court further directed that the appeal, if so, filed as directed above, shall not be dismissed on the ground of limitation and shall be adjudicated on merits.<br> Scholarly articles for knowledge sharing by authors, experts, professionals ....