Facts of the Case

The petitioner, Utkarsh Arora, proprietor of M/s Aura Interior Hardware, filed a writ petition under Article 226 challenging the Order-in-Original dated 27 January 2025, dispatched on 1 February 2025, whereby a demand of ₹1,14,114 along with penalty was raised. The demand arose from an investigation by the CGST Department into alleged large-scale fraudulent availment and passing on of input tax credit through goods-less invoices. The investigation revealed that three supplier firms managed by one individual and his associates were fake and non-existent, and that 23 supplier firms had passed on inadmissible ITC aggregating to ₹1,22,26,83,520 to 268 recipient firms. The petitioner was listed as one of the recipient firms and was alleged to have availed ITC without actual receipt of goods.

Issues Involved

Whether the High Court should exercise writ jurisdiction in a case involving alleged fraudulent availment of ITC as a recipient, whether the petitioner was denied principles of natural justice, whether the impugned order was barred by limitation, 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 no show cause notice was issued and no personal hearing was granted prior to passing the impugned order. It was further argued that the show cause notice pertained only to an earlier period and not to the period covered by the impugned order, and that the order was passed beyond the prescribed limitation period.

Respondent’s Arguments

The Revenue submitted that show cause notices had been issued and multiple personal hearing opportunities were granted on 13 December 2024, 30 December 2024 and 13 January 2025, which the petitioner failed to attend. It was argued that the impugned order clearly recorded compliance with principles of natural justice and that the case involved serious allegations of fraudulent ITC based on fake invoices, making the order appealable under Section 107 of the CGST Act.

Court Order / Findings

The Delhi High Court examined the impugned order and found that it expressly recorded issuance of show cause notice and grant of multiple personal hearing opportunities, which the petitioner failed to avail. The Court held the petitioner’s plea of absence of notice and hearing to be factually incorrect. The Court further held that the impugned order related to the period 2017 to 2023 and was passed within the prescribed limitation, as the last date for passing the order for FY 2017-18 was 5 February 2025. Relying on its earlier decision in Mukesh Kumar Garg vs Union of India, the Court reiterated that writ jurisdiction ought not to be exercised in cases involving alleged fraudulent ITC, which require detailed factual examination. Since the impugned order was appealable under Section 107, the Court declined to entertain the writ petition.

Important Clarification

The Court clarified that cases involving fraudulent ITC and fake invoicing entail complex factual analysis and serious implications for the GST regime, which cannot be adjudicated under Article 226. Where an efficacious statutory appellate remedy exists, parties must pursue the remedy provided under the CGST Act.

Final Outcome

The writ petition was dismissed. 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, and it was directed that if such appeal is filed within the stipulated period, it shall not be dismissed on the ground of limitation and shall be decided on merits, with all issues left open.

Link to Download Order https://www.mytaxexpert.co.in/uploads/1769497972_UTKARSHARORAPROPOFMSAURAINTERIORHARDWAREVsADDITIONALCOMMISSIONERCGSTDELHINORTHWARD20ZONE2NEWDELHIANDANR.pdf

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