TaxTMI 
TaxTMI 
2026 (9) TMI 536
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....025, CM APPL. 11278/2025 and CM APPL. 46532/2026, W. P. (C) 7287/2026, CM APPL. 35664/2026 and CM APPL. 35665/2026, W. P. (C) 7288/2026, CM APPL. 35666/2026 & CM APPL. 35667/2026, W. P. (C) 7290/2026, CM APPL. 35670/2026 & CM APPL. 35671/2026, W. P. (C) 7292/2026, CM APPL. 35673/2026 & CM APPL. 35674/2026, W. P. (C) 9414/2026, CM APPL. 43857/2026. - -<br>GST<br>HON'BLE MR. JUSTICE ANIL KSHETARPAL HON'BLE MS. JUSTICE SHAIL JAIN W.P.(C) 8829/2026, CM APPL. 41299/2026, CM APPL. 41300/2026, W.P.(C) 8892/2026, CM APPL. 41609/2026, CM APPL. 41610/2026, W.P.(C) 8893/2026, CM APPL. 41611/2026, CM APPL. 41612/2026, W.P.(C) 2338/2025, CM APPL. 11023/2025 and CM APPL. 46528/2026, W.P.(C) 2388/2025, CM APPL. 11278/2025 and CM APPL. 46532/2026, W.P.(C) 7287/2026, CM APPL. 35664/2026 and CM APPL. 35665/2026, W.P.(C) 7288/2026, CM APPL. 35666/2026 & CM APPL. 35667/2026, W.P.(C) 7290/2026, CM APPL. 35670/2026 & CM APPL. 35671/2026, W.P.(C) 7292/2026, CM APPL. 35673/2026 & CM APPL. 35674/2026, W.P.(C) 9414/2026, CM APPL. 43857/2026 & CM APPL. 43858/2026, W.P.(C) 9428/2026, CM APPL. 43879/2026 & CM APPL. 43880/2026, W.P.(C) 9429/2026, CM APPL. 43884/2026 & CM APPL. 43885/2026, W.P.(C) 946....
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...., 2017 [hereinafter referred to as the 'CGST Act'] and involve overlapping questions concerning the validity of proceedings under Section 122 of the CGST Act, the competence of the officer initiating such proceedings, the manner of adjudication, the evidentiary material relied upon by the Department and the availability of the statutory appellate remedy under Section 107 of the CGST Act. 2. W.P.(C.) No. 7287/2026 is being treated as the lead matter. The said petition, filed by M/s Siwon Enterprises Pvt. Ltd., assails the Order-in-Original dated 26.12.2025 and the consequential Form GST DRC-07 and also challenges the Show Cause Notice ('SCN') dated 30.06.2025 on the ground that it was issued by an officer who, according to the Petitioner, had not been assigned the relevant functions under Section 122 at the time of issuance. The Petitioner also raises grievances concerning the quantum of penalty, consideration of its Reply, the evidentiary basis of the proceedings, denial of cross-examination and the amended requirement of pre-deposit for an appeal. 3. W.P.(C.) Nos.7287/2026, 7286/2026, 7290/2026, 7292/2026, 9414/2026, 9428/2026, 9429/2026, 9462/2026, 9464/2026, 9467/2026, 947....
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....were involved in transactions relating to fraudulent Input Tax Credit. The Petitioners in the principal batch dispute the allegations and contend that the material relied upon by the Department does not establish, by independent and transaction-wise evidence, their involvement in the alleged transactions. 8. Insofar as the lead matter, W.P.(C.) No. 7287/2026, is concerned, the Petitioner, M/s Siwon Enterprises Pvt. Ltd., was engaged in the business of trading and supply of TMT bars and allied iron and steel products. Its GST registration had been cancelled on the application of the taxpayer with effect from 25.02.2023. According to the Petitioner, the cancellation was not pursuant to any adverse adjudication, investigation or penal action. 9. On 10.10.2024, officers of the Directorate General of GST Intelligence conducted search proceedings at the residential premises of the directors of the Petitioner Company. According to the Petitioner, no incriminating material establishing any wrongful activity on its part was recovered during the search. The Department thereafter continued its investigation and recorded statements of various persons and examined electronic data and othe....
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....t supplied despite requests. Some contend that they were not afforded an effective opportunity of personal hearing. Some allege that the hearings stated to have been conducted were not effectively held and some contend that statements relied upon against them were obtained in circumstances which rendered their voluntariness and evidentiary value doubtful. 15. Order-in-Original dated 26.12.2025 came to be passed in the respective proceedings. The amounts involved in the adjudication proceedings are substantial, with the tax and penalty liabilities recorded in the respective Orders-in-Original running into hundreds of crores of rupees. In the lead matter, the adjudicating authority imposed penalties under various clauses of Section 122(1), resulting in a liability substantially exceeding the amount reflected in the SCN/DRC-01. In the case of the lead Petitioner, the consequential DRC-07 reflected an aggregate liability of approximately Rs. 2,27,72,13,235/-. 16. The Petitioners contend that the escalation in liability resulted from repeated imposition or multiplication of penalties under several clauses of Section 122(1), without independent transaction-wise findings establishin....
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....ndividual and a non-taxable entity and is not a registered person under the CGST/SGST enactments. The challenge therein is directed against SCN dated 24.09.2025 and the consequential Order-in-Original dated 24.03.2026 concerning penalty under Section 122(1A). 22. By the SCN dated 24.09.2025, penalty of Rs. 68,62,24,963/- was proposed in respect of alleged Input Tax Credit availed and a further penalty of Rs. 94,84,38,536/- was proposed in respect of alleged Input Tax Credit passed on through five firms alleged to have been created by the Petitioner. The SCN invoked the extended period under Section 74(1) of the CGST Act. 23. The Petitioner submitted a detailed Reply and thereafter participated in the adjudication proceedings. He disputed the statement allegedly recorded under Section 70 of the CGST Act, contending that the statement was not voluntary and had been obtained under duress. The Petitioner also contended that copies of relied-upon documents had not been supplied despite request and that his request for cross-examination of third parties whose statements or evidence were relied upon had not been acceded to. 24. The adjudicating authority thereafter passed the Ord....
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....ral justice. It is contended that although detailed Replies and documentary material were submitted, the same were either not considered or were rejected without cogent reasons. In certain cases, relied-upon documents were not supplied and effective opportunity of personal hearing was either not granted or was not meaningfully afforded. iii. The adjudication substantially relies upon statements of third parties, electronic data and handwritten records. Despite specific requests, the Petitioners were denied an opportunity to cross-examine persons whose statements were relied upon. The electronic material was also not accompanied by the requisite safeguards and certification. Such untested material, according to the Petitioners, could not form the basis of the penal liability imposed upon them. iv. The Respondents have imposed penalties under multiple clauses of Section 122(1) in respect of the same alleged conduct, thereby multiplying the liability. It is contended that the final liability, in certain cases, is substantially higher than the amount proposed in the SCN/DRC-01 and that the adjudication has consequently travelled beyond the scope of the SCN, causing se....
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....osit. It is, therefore, contended that, in view of the alleged jurisdictional defects and violation of the principles of natural justice, the present cases fall within the recognised exceptions to the rule of alternative remedy. xi. Insofar as W.P.(C.) No. 9831/2026 is concerned, learned counsel representing the Petitioner has, in addition, contended that the two alternatives contemplated under Section 122(1A) cannot simultaneously furnish the basis for imposition of separate penalties and that the Petitioner could not be subjected to two separate penalties equivalent to the Input Tax Credit allegedly availed and the Input Tax Credit allegedly passed on. xii. It is further submitted on behalf of the Petitioner in W.P.(C.) No.9831/2026 that the statement under Section 70 of the CGST Act was allegedly recorded without following the safeguards referred to in Paramvir Singh Saini v. Baljit Singh & Ors SLP(Crl.) No. 3543/2020. It is also contended that the corrigendum dated 19.11.2025 was neither supplied to the Petitioner nor dealt with in the impugned Order-in-Original and that the consequential adjudication is, therefore, vitiated by breach of the principles of natu....
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..... It is contended, on the strength of the reasoning adopted therein, that the proceedings under Sections 73 or 74 of the CGST Act and the consequential penalty contemplated under Section 122 are required to be read together and that a separate adjudication under Section 122 is not contemplated where the penalty arises from the very contravention adjudicated under Sections 73 or 74 of the CGST Act. In this regard, reliance is placed upon Patanjali Ayurved Ltd. v. Union of India & Ors. [2025] 99 GSTL7 (Allahabad). It is submitted that the challenge to the competence of the officer and the interpretation of the statutory framework governing assignment of functions do not disclose a patent jurisdictional defect warranting interference under Article 226. The Respondents also rely upon the decision of the Telangana High Court in Alokadei Holdings Pvt. Ltd. v. Commissioner of Central Tax W.P. No. 4426/2026. It is, however, noted that the judgment in Patanjali Ayurved (supra) is presently under challenge before the Supreme Court. vi. Insofar as the amended requirement of pre-deposit under Section 107(6) is concerned, learned counsel representing the Respondents, at the time of hea....
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....388/2025 arise from a SCN dated 17.07.2020. Thus, all the proceedings in the present batch were initiated prior to 01.10.2025. Consequently, in terms of Gaurav Jain(supra), the substituted proviso to Section 107(6) would have no application to the Appeals arising from the impugned Orders-in-Original. 34. This Court next considers the challenge founded upon Section 122(1). The contention of the Petitioners is that Section 122(1) operates against a 'taxable person' and, therefore, a person who is neither registered nor otherwise liable to be registered cannot be subjected to penalty thereunder merely on the allegation that such person was associated with, or derived benefit from, the transactions of a taxable person. 35. The controversy is not merely academic. Section 122(1) itself predicates the liability upon the status of the person proceeded against as a 'taxable person', whereas Section 122(1A), which is separately worded, operates upon 'any person' in the circumstances specified therein. The distinction in the statutory language cannot be ignored. At the same time, whether a particular Petitioner answers the statutory description, whether such person was liable to registr....
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....t to such conditions and limitations as may be specified in this behalf by him, delegate his powers to any other officer who is subordinate to him." 40. The statutory scheme thus makes a distinction between the designation or rank of an officer and the assignment of a particular statutory function. The expression 'proper officer' in Section 2(91) is function-specific. Merely being an officer of central tax, therefore, does not, by itself, answer the question whether that officer is the proper officer for every function under the Act. At the same time, the assignment of functions may be effected through the statutory and administrative instruments issued by the Board in exercise of the powers under Sections 3 and 5. 41. In this regard, Notification No. 14/2017-Central Tax dated 01.07.2017 [hereinafter referred to as 'Notification No. 14'] assumes significance. The said notification, issued in exercise of powers under Sections 3 and 5 of the CGST Act and Section 3 of the IGST Act, appointed officers in the Directorate General of GST Intelligence, Directorate General of GST and Directorate General of Audit as central tax officers and invested them with all the powers under the C....
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....alidate a SCN which was issued before 27.10.2025. 45. On a conjoint reading of the aforesaid provisions and the two notifications, this Court is unable to hold, at this stage, that in the absence of a specific assignment under Section 2(91), an officer of central tax otherwise empowered under Sections 3 and 5 of the CGST Act is, as a matter of law, denuded of authority to initiate proceedings in respect of a contravention for which the Act confers jurisdiction upon an officer of the requisite rank. Notification No. 14 specifically invests the officers of DGGI with the powers exercisable by central tax officers of the corresponding rank, while Notification No.02 assigns various functions under the Act to the specified classes of officers. The question whether these provisions, read together, constitute sufficient conferment of authority in respect of the proceedings in question, therefore, cannot be answered merely on the basis of the subsequent Circular dated 27.10.2025. 46. Further, the Circular dated 27.10.2025 is issued in view of the amendment in the CGST Act vide the Finance Act, 2024, dated 16.08.2024, which was enforced on 01.11.2024, whereby various provisions of the ....
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....he statutory Appellate Authority under Section 107, which is competent to consider both questions of fact and law. The Petitioners would, therefore, be at liberty to raise the said jurisdictional objection in the statutory Appeals, but the existence of this objection, by itself, does not furnish sufficient ground for this Court to bypass the efficacious appellate remedy. 49. There is an additional reason why this Court would be slow to exercise its extraordinary jurisdiction in the present batch. The principal batch arises from a common investigation involving 629 firms/entities, and the Order-in-Original has proceeded against the said entities on the basis of a common body of material. The aggregate tax and penalty liability arising from the proceedings runs into hundreds of crores of rupees. The lead Petitioner alone has been visited with a consequential liability reflected in DRC-07 of approximately Rs .2,27,72,13,235/-. The adjudication involves a large volume of documentary, electronic and statement-based material, besides questions concerning the individual role of different Petitioners and the genuineness of particular transactions. 50. The Petitioners have raised seve....
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.... of the position clarified in Gaurav Jain(supra) with regard to the applicable pre-deposit. The Petitioners must, therefore, avail the statutory remedy before seeking recourse to the extraordinary jurisdiction of this Court. 54. This Court is, therefore, of the considered view that the present batch does not warrant exercise of the extraordinary jurisdiction under Article 226 of the Constitution. The question concerning the applicability of Section 122(1) to a person who is not a 'taxable person' is left open, as the said issue is presently pending consideration before the Supreme Court. Insofar as the competence of the officer to initiate proceedings under Section 122 is concerned, this Court has examined the statutory scheme and the relevant notifications and is of the view that the objection raised does not disclose a patent or self-evident absence of jurisdiction warranting interference in writ jurisdiction. The Petitioners, however, shall be at liberty to urge the said objection before the Appellate Authority, along with their other grounds, including the effect of the subsequent Circular dated 27.10.2025 and the applicability of the principles laid down in Sunil Chauhan (s....