Facts of the Case

The petitioner, Samyak Jain, challenged an adjudication order dated 31 January 2025 raising a GST demand exceeding ₹48 crore. The petitioner was earlier registered under the VAT regime under the trade name “M/s Samyak International”. Upon introduction of GST, a provisional GST registration was allotted in the same name, which according to the petitioner was not sought by him. The petitioner claimed to have closed business operations from 28 July 2017 and obtained a separate GST registration under the name “M/s Samyak Fashion (India)”. The Department alleged that under the provisional GST registration of “M/s Samyak International”, large-scale fraudulent availment and passing on of input tax credit had taken place involving numerous entities. The petitioner disowned the transactions, alleging misuse of his provisional GST number, and stated that he had lodged a police complaint and cooperated with the Department. The adjudicating authority passed a detailed order holding the firm to be fake and raising demands based on extensive analysis of GSTR-1 and recipient data.

Issues Involved

Whether the High Court should exercise writ jurisdiction in a case involving large-scale fraudulent availment and passing on of ITC, whether the petitioner’s plea of misuse of provisional GST registration could be adjudicated in writ proceedings, and whether the petitioner ought to be relegated to the statutory appellate remedy under Section 107 of the CGST Act.

Petitioner’s Arguments

The petitioner contended that he had no knowledge of the transactions conducted under the name “M/s Samyak International” and that his provisional GST registration had been misused by unknown persons. It was argued that the petitioner had already closed his business and had informed the authorities, lodged a police complaint, and fully cooperated with the investigation. The petitioner sought quashing of the adjudication order on the ground that he was not involved in the alleged fraudulent ITC transactions.

Respondent’s Arguments

The Revenue submitted that the impugned order contained detailed findings showing how ineligible ITC was availed and passed on to numerous recipients using the petitioner’s GST registration. It was argued that the matter involved complex factual questions requiring examination of evidence, statements, returns and transactional data, which could not be undertaken in writ jurisdiction. The Revenue contended that the petitioner had an efficacious statutory remedy by way of appeal.

Court Order / Findings

The Delhi High Court observed that the allegations involved large-scale fraudulent availment and passing on of ITC with serious implications for the GST regime. The Court noted that the impugned order contained detailed factual findings relating to transactions with multiple entities and that the petitioner’s defence of misuse of GST registration would require a full factual examination. Relying on its earlier decision in Mukesh Kumar Garg vs Union of India, the Court reiterated that writ jurisdiction should be exercised sparingly in cases involving alleged ITC fraud and that such matters are best adjudicated in statutory appellate proceedings. The Court held that the adjudication order was appealable under Section 107 of the CGST Act and declined to examine the merits in writ jurisdiction.

Important Clarification

The Court clarified that allegations of fraudulent ITC involve complex factual matrices that cannot be adjudicated under Article 226. Where a detailed statutory appellate mechanism exists, parties must pursue the remedy provided under the CGST Act rather than invoking writ jurisdiction, except in exceptional circumstances.

Final Outcome

The writ petition was disposed of. The petitioner was granted liberty to file a statutory appeal under Section 107 of the CGST Act within one month along with the requisite pre-deposit. It was directed that if such appeal is filed within the stipulated period, it shall be decided on merits and shall not be dismissed on the ground of limitation. The Economic Offences Wing of Delhi Police was also directed to file a status report, while all merits were left open to be examined in appellate proceedings.

Link to Download Order https://www.mytaxexpert.co.in/uploads/1769497831_SAMYAKJAINVsSUPERINTENDENTADJUDICATIONCENTRALGSTDELHIORS..pdf

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