Facts of the Case

The petitioner, Navneet Bansal, challenged the Order-in-Original dated 28.11.2024 passed by the Additional Commissioner, CGST Delhi North, arising out of a show cause notice dated 07.05.2021. The proceedings originated from an investigation by the Directorate General of GST Intelligence into alleged fraudulent availment of CENVAT credit through issuance of invoices without actual supply of goods such as PVC Resin. Searches were conducted at various premises, and statements were recorded, including the petitioner’s statement dated 06.01.2021, wherein he admitted issuance of invoices without supply of goods and receipt of commission. Based on the investigation, penalty of ₹1,63,36,788 was imposed on the petitioner under Rule 26 of the Central Excise Rules, 2002 read with Section 174 of the CGST Act, 2017.

Issues Involved

Whether the High Court should exercise writ jurisdiction in a case involving allegations of fraudulent availment of CENVAT credit, whether non-supply of relied upon documents vitiated the adjudication proceedings, and whether the petitioner was entitled to bypass the statutory appellate remedy under Section 107 of the CGST Act.

Petitioner’s Arguments

The petitioner contended that the relied upon documents were not supplied despite requests and that the adjudicating authority relied upon submissions made by another noticee, namely M/s Devansh Chemical Pvt. Ltd. It was argued that the proceedings were vitiated for violation of principles of natural justice and that the impugned penalty order was unsustainable.

Respondent’s Arguments

The Revenue submitted that the petitioner was fully aware of the show cause notice and investigation and yet failed to file any reply on merits or retract his statement. It was argued that the petitioner admitted his role in issuance of goods-less invoices and receipt of commission, and that the impugned order was appealable under Section 107 of the CGST Act. The Revenue contended that writ jurisdiction ought not to be exercised in cases involving serious allegations of tax fraud.

Court Order / Findings

The Delhi High Court held that the petitioner did not file any reply to the show cause notice and failed to participate in adjudication proceedings despite being aware of the allegations. The Court observed that the petitioner’s statement admitting issuance of invoices without supply of goods remained unretracted and formed a valid basis for adjudication. Relying on Supreme Court and Delhi High Court precedents, including Commercial Steel Limited and Mukesh Kumar Garg, the Court reiterated that writ jurisdiction should ordinarily not be exercised in cases involving fraudulent availment of CENVAT or input tax credit, which involve complex factual disputes. The Court held that the impugned order was appealable and that the petitioner ought to pursue the statutory appellate remedy.

Important Clarification

The Court clarified that allegations involving fraudulent availment of credit, issuance of goods-less invoices, and complex factual transactions require detailed factual adjudication and cannot be effectively examined in writ proceedings. The observations made by the Court would not bind the appellate authority if an appeal is filed.

Final Outcome

The writ petition was dismissed. However, the petitioner was granted liberty to file an appeal under Section 107 of the CGST Act by 31.01.2026 along with the requisite pre-deposit, and it was directed that such appeal, if filed within time, shall be adjudicated on merits and shall not be dismissed on the ground of limitation.

Source Link- https://delhihighcourt.nic.in/app/showFileJudgment/PMS17122025CW47232025_183851.pdf

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