Non-service of notice against Wrongful Availment of ITC Not raised  in time of hearing : Delhi HC Directs Petitioner to File Appeal Under CGST Act [Read Order]

The Delhi High Court directed the petitioner to file an appeal under the Central Goods and Services Tax Act, 2017 (CGST) as the non-service of notice against wrongful availment of the ITC was not raised at time of hearing

Ramesh Kumar Wadhera, the petitioner challenged the impugned Order-in-Original dated 4th February, 2025 (the ‘impugned Order-in-Original’) passed by the Office of the Commissioner, Central Tax (Delhi West), which was passed pursuant to the Show Cause Notice dated 2nd August, 2024 (the ‘SCN’) issued by the Directorate General of GST Intelligence.

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The ground on which the challenge has been raised in the present petition, is that the notices of hearing were not served upon the Petitioner and the impugned Order-in-Original has been passed without hearing the Petitioner.

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On the last date of hearing, i.e., 28th April, 2025 the Court considered the allegations made in the SCN as also the demands raised therein. Subsequently, the Court, with some consternation, observed that the parties involved in this particular SCN and the impugned Order-in-Original, along with the firms concerned, are also involved in certain other Show Cause Notices and other proceedings initiated in respect of wrongful availment of Input Tax Credit (‘ITC’) under the Goods and Services Tax regime.

The Court further on the said date that there are various allegations against lawyers which have been raised in the SCN and the impugned Order-in-Original. The said allegations were made in respect of how the said lawyers played a role in incorporating all the alleged firms in order to enable wrongful availment of ITC.

The matter is again taken up for hearing today. On the last date of hearing, i.e., 28th April, 2025, the Directorate General of GST Intelligence (‘DGGI’) was directed to place on record a status report giving details of all the Show Cause Notices and other investigations which may have been initiated against the various firms and individuals involved in the present SCN and the impugned order in original dated 4th February, 2025.

On a perusal of the said status report, it is observed that a list of 73 cases has been attached which contains the details of other Show Cause Notices and orders issued by the State GST Authorities against the noticees of the SCN. Further, the status report reveals that the entire investigation pertaining to this matter started when high value transactions were noticed in respect of four firms.

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A division bench of Justice Prathiba M. Singh and Justice Rajneesh Kumar Gupta observed that the Show Cause Notice does not deserve to be quashed. When the above order was passed, the Petitioner had an opportunity to seek a hearing in the Show Cause Notice from the Court itself, which the Petitioner did not do. The factum of non-service of notice in time of hearing was also not raised when the Court decided the matter on 29th January, 2025.

In Ramjas Foundation v. Union of India, (2010), it was observed that the High Court is exercising discretionary and extraordinary jurisdiction under Article 226 of the Constitution. Over and above, a court of law is also a court of equity. It is, therefore, of utmost necessity that when a party approaches a High Court, he must place all the facts before the Court without any reservation. If there is suppression of material facts on the part of the applicant or twisted facts have been placed before the Court, the writ court may refuse to entertain the petition and dismiss it without entering into merits of the matter.”

Under these circumstances, the court relegated the Petitioner to the remedy of filing an appeal under Section 107 of the CGST Act along with the requisite pre-deposit. The Petitioner is granted time till 10th July, 2025 to file the appeal along with the pre deposit, if any. If the appeal is filed, within the timeline granted, the same shall not be dismissed on limitation but shall be considered and adjudicated on merits.

To Read the full text of the Order CLICK HERE

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