High Courts cannot Adjudicate Accountant's Guilt in GST ITC Fraud under Writ Jurisdiction: Delhi HC [Read Order]

The Delhi High Court has ruled that the role of an accountant in a large-scale fraudulent Goods and Services Tax (GST) Input Tax Credit (ITC) scam cannot be adjudicated under its writ jurisdiction, dismissing a petition filed by Sunil Gulati, an accountant penalized for his alleged involvement in GST violations. The bench, comprising Justice Prathiba M. Singh and Justice Rajneesh Kumar Gupta, directed the petitioner to pursue remedies through appellate channels under Section 107 of the CGST Act.

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Gulati had approached the court under Article 226/227 of the Constitution, contesting a penalty of over ₹16 crore imposed by the Central Goods and Services Tax (CGST) Department. He claimed limited involvement, stating that his duties were confined to generating invoices, e-way bills, maintaining purchase records, and ledger entries in Tally software. In contention that he neither initiated nor benefited from the transactions, Gulati argued that he was unjustly penalized under Section 122(1A) of the CGST Act.

The GST authorities, however, contended that Gulati’s role went beyond clerical duties. His statement recorded under Section 14 of the Central Excise Act revealed that he was aware of the operations of firms and entities implicated in facilitating the fraudulent ITC claimed by M/s Monga Iron and Steel Pvt. Ltd., which alone allegedly availed inadmissible credit worth nearly ₹20 crore. The court observed that a larger collusion was at play, involving multiple individuals and firms.

Rejecting the plea, the bench maintained that the petitioner’s assertions about not benefiting from the transactions raise factual disputes that fall outside the scope of writ jurisdiction.

The court held that these questions should be resolved through a proper appellate mechanism. “Entertaining this writ petition would necessitate adjudication of intricate factual matters, which is impermissible,” the judgment noted.

Acknowledging that the impugned order is appealable, the court granted Gulati an additional 30 days to file an appeal, ensuring that such appeal, if made within the extended period, would not be rejected on grounds of limitation. The petition was accordingly dismissed.

To Read the full text of the Order CLICK HERE

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