TaxTMI 
TaxTMI 
2026 (10) TMI 295
X X X X Extracts X X X X
X X X X Extracts X X X X
....rest under Section 50 of the CGST Act has also been confirmed. 2. The Petitioner has also challenged the constitutional validity of Section 16(2)(c) of the CGST Act and has sought, inter alia, that the said provision be struck down or read down so as to exclude bona fide recipients who have undertaken genuine transactions with duly registered suppliers. A challenge has also been raised to the proviso to Section 16(2) of the CGST Act insofar as it relates to the liability to pay interest where payment to the supplier is made beyond the period of 180 days. 3. The Petitioner has further challenged the show-cause notice dated 22.09.2023 issued under Section 74 of the CGST Act and the consequential adjudication proceedings. 4. The principal controversy which arises in the present Petition, insofar as the impugned adjudication is concerned, is whether the order passed under Section 74 of the CGST Act discloses the necessary factual and statutory foundation for fastening upon the Petitioner the aforesaid tax, interest and penalty liabilities. FACTUAL MATRIX 5. The Petitioner is a company engaged in the business of manufacturing copper wires and is registered under the CGST ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....t amounting of Rs. 50,30,256/- as detailed in para 2.4 above under Section 50 of the CGST Act 2017 with the corresponding provisions of Delhi SGST Act, 2017 / IGST Act, 2017; (iv) I impose Penalty of Rs. 3,34,21,261/- ... under Section 74(1) of the CGST Act, 2017." CONTENTIONS OF THE PARTIES 12. Learned counsel for the Petitioner submits that the Impugned Order suffers from fundamental infirmities and cannot be sustained in law. It is submitted that the order does not disclose the names of the suppliers from whom the Petitioner allegedly received the supplies, the dates of the invoices in question, the dates from which the respective GST registrations were cancelled, or the material on the basis of which it was concluded that the ITC availed by the Petitioner was liable to be denied. 13. Learned counsel further submits that, notwithstanding the invocation of Section 74 of the CGST Act, neither the show-cause notice nor the Impugned Order discloses the specific particulars of fraud, wilful misstatement or suppression of facts attributable to the Petitioner. According to the Petitioner, the mere assertion that certain suppliers had subsequently had their registratio....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... the CGST Act and a purported bona fide purchasing dealer under the Delhi Value Added Tax Act where the supplier fails to pay the requisite tax. The Supreme Court also took note of the statutory scheme under Section 41 and Sections 73 and 74 of the CGST Act concerning re-availment of reversed ITC upon discharge of the tax liability by the supplier. 22. The Supreme Court consequently held that no grounds were made out for declaring Section 16(2)(c) of the CGST Act unconstitutional or for reading down the said provision and affirmed the judgment of the Gujarat High Court. 23. In view of the aforesaid judgment of the Supreme Court, the challenge to the constitutional validity of Section 16(2)(c) of the CGST Act cannot be accepted. The reliefs seeking striking down or reading down of the said provision are, accordingly, declined. 24. Having dealt with the constitutional challenge, the Court now turns to the legality of the impugned adjudication order. The question at this stage is not whether the Petitioner is, ultimately, entitled to the ITC claimed by it. The question is whether the demand confirmed under Section 74 of the CGST Act has been adjudicated upon in accordance wit....
X X X X Extracts X X X X
X X X X Extracts X X X X
....l assertion that ITC was availed on supplies received from suppliers whose GST registrations had allegedly been cancelled with effect from dates preceding the dates of the invoices. 29. However, the Impugned Order does not disclose the particulars of the suppliers to whom the aforesaid finding relates. Neither the names of the suppliers nor their GSTINs have been set out in the body of the Impugned Order. The order also does not disclose, supplier-wise, the date of the relevant invoice, the date from which the registration was cancelled, the quantum of ITC attributable to each such supplier, or the material on the basis of which the cancellation dates were ascertained. 30. These particulars assume significance because the entire demand of Rs. 3,34,21,261/- rests upon the allegation that the suppliers' registrations stood cancelled from dates preceding the issuance of the invoices. In their absence, the finding remains at the level of a general assertion and does not disclose the factual foundation upon which the demand has been quantified. 31. This assumes particular significance because the proceedings have been initiated under Section 74 of the CGST Act. Invocation o....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ary to finally adjudicate upon the effect of these discrepancies, since the Impugned Order is liable to be set aside on the more fundamental ground that the factual and statutory foundation necessary to sustain the demand under Section 74 has not been disclosed. 38. The reliance placed on the order dated 24.09.2025 passed in W.P.(C) 14428/2025 also does not assist the Respondents. The controversy in the present Petition has to be examined with reference to the show-cause notice, the material relied upon therein and the impugned adjudication order under challenge in the present proceedings. 39. In the facts of the present case, the aforesaid order cannot be treated as determinative of the controversy arising herein. The present adjudication has to stand or fall on the basis of the material forming part of the proceedings impugned before this Court. 40. The deficiencies noticed herein go to the root of the adjudication. The Impugned Order does not set out the factual particulars necessary to ascertain the transactions forming the basis of the demand, nor does it record the specific findings necessary to sustain the invocation of Section 74 against the Petitioner. 41. This....