TaxTMI 
TaxTMI 
2026 (6) TMI 1285
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....ts and do not intend to prefer an appeal before the Appellate Authority under Section 107 of the CGST Act, 2017. 3. In the present petition, the petitioners have prayed for quashing and setting aside the impugned Order-in-Original dated 30.01.2026 passed by the respondent No. 2, whereby penalty has been levied upon under Sections 122(1A) and 122(3) of the CGST Act, 2017. 4. Learned advocate Mr. Harjotsingh J. Kassowal, appearing on behalf of the petitioners, has submitted that the present petition is maintainable and deserves to be entertained on two counts: (i) no finding has been recorded by the respondent No. 2 establishing the liability of the present petitioners under Sections 122(1A) of the CGST Act, 2017 and (ii) the impugned Order-in-Original dated 30.01.2026 has been passed in violation of the principles of natural justice, without considering the defence raised by the petitioners, particularly in their reply dated 15.05.2025. It is thus submitted that the impugned Order-in-Original deserves to be quashed and set aside on the ground of violation of the principles of natural justice. He has further submitted that the petitioners are partners of the partnership firm an....
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....nse to the judgments relied upon by learned advocate Mr. Harjotsingh J. Kassowal, learned Senior Standing Counsel Mr. C.B. Gupta has submitted that Section 122(1A) of the CGST Act, 2017 was introduced with effect from 01.01.2021 and that the impugned Order-in-Original has been passed by the adjudicating authority by invoking the said provision against the petitioners. It is submitted that the present writ petition does not warrant interference under Article 226 of the Constitution of India. 8. We have heard the learned advocates for the respective parties. 9. As already recorded in the preceding paragraphs and in the order dated 12.06.2026, learned advocate Mr. Harjotsingh J. Kassowal was called upon to state whether the petitioners intended to avail the statutory remedy of appeal under Section 107 of the CGST Act, 2017 or whether they wished to invite an order on merits. Since learned advocate Mr. Kassowal, on instructions, opted to invite an order on merits, we are left with no option but to adjudicate the present writ petition on its facts and merits. 10. The petitioner No. 1 and the petitioner No. 2 are partners of M/s. Maa Renuka Trading Company. Along with the partne....
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....d also been drawn. Petitioner No. 1, upon being confronted with the statement of Shri Ankur Kanda (broker), admitted that Shri Ankur Kanda used to send invoices relating to the goods, allegedly purchased by them, whereupon they would transfer the amounts into the bank accounts of such parties as instructed by Shri Ankur Kanda. He further admitted that Shri Ankur Kanda would thereafter return the money to them in cash through angadia after deducting his commission. 13. The adjudicating authority in paragraph No.7.5 of the order has discussed thus : - "7.5 Partners of M/s Maa Renuka Trading, Indore by operating and managing M/s Sanwariya Trading, Vadodara for wrongly and fraudulently availing and utilizing input tax credit have rendered themselves liable for penalty under Section 122(1A) & Section 122(3) of CGST Act' 2017" 14. Thus, the adjudicating authority has analyzed the complicity of the present petitioners, who are the partners of M/s Maa Renuka Trading, Indore and operating and managing M/s. Sanwariya Tranding, Vadodara for wrongly and fraudulently availing and utilizing ITC, and thus rendering themselves liable for penalty under Section 122(1A) and Section....
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....g of funds through hawala transactions. It has been recorded that petitioner No. 1 - Shri Manoj Agrawal, in his statement recorded under Section 70 of the CGST Act, 2017, unequivocally admitted his active role in coordinating the transactions with Shri Ankur Kanda. He admitted that he used to send images of currency notes to Shri Ankur Kanda as coded signals for routing cash through hawala channels and that he also shared specific hawala details relating to Indore and Mumbai to facilitate such transfers. 19. After recording the aforesaid findings and appreciating the evidence on record, the adjudicating authority imposed penalties upon the petitioners under the provision of Section 122 of the CGST Act, 2017. 20. At this stage, it would be apposite to refer to Section 122(1A) of the CGST Act, 2017, which reads as under: "Section 122(1A) - Any person who retains the benefit of a transaction covered under clauses (i), (ii), (vii) or clause (ix) of subsection (1) and at whose instance such transaction is conducted, shall be liable to a penalty of an amount equivalent to the tax evaded or input tax credit availed of or passed on. [(1B) [Any electronic co....