Multi-Noticee in GST ITC Fraud Cases: Delhi HC Clarifies How Adjudicating Authority is Determined [Read Order]

In a recent ruling, the Delhi High Court clarified how the adjudicating authority is determined in Goods and Services Tax (GST) cases involving multiple noticees and allegations of fraudulent availment of Input Tax Credit (ITC).

Manikjeet Singh Kals, the petitioner, filed a writ petition challenging an adjudication order passed under the Central Goods and Services Tax Act. The order raised tax, interest, and penalty demands against him on allegation of fraudulent ITC availment. The petitioner is the proprietor of Bharat Facilities.

The case arose from an investigation conducted by the Directorate General of GSTIntelligence (DGGI) into an alleged racket involving fake firms which issued invoices without any actual supply of goods or services. These invoices were allegedly used by various entities to wrongly avail ITC. The petitioner’s firm was alleged to be a part of this chain.

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The petitioner’s counsel argued that the show cause notice could not have been issued by a Superintendent of DGGI considering the amount involved, and that it should be issued by an officer of a higher rank. It was also argued that there was confusion regarding jurisdiction, as the proceedings appeared to involve both Delhi and Faridabad, making it unclear as to which authority had passed the final order and where the appeal should lie.

On behalf of the respondents, the counsel argued that although the show cause notice appeared on the GST portal under the name of a Superintendent, it was actually signed by the Joint Director of DGGI. Reliance was placed on relevant circulars and notifications to explain how adjudication and appeals are handled in cases involving multiple noticees across different jurisdictions.

Justice Prathiba M. Singh and Justice Shail Jain observed that in cases where multiple parties are involved, adjudication cannot be carried out by different commissionerates.

The court explained that the adjudicating authority is determined on the basis of the jurisdiction where the highest tax demand arises, as provided under the applicable circulars and notifications governing DGGI cases.

The court further observed that once adjudication is completed, the summary of the order in Form DRC-07 has to be uploaded by the concerned commissionerate. It was pointed out that depending on the monetary limits, this uploading may be done either by a Superintendent or by a higher officer, and such procedural step does not affect the validity of the adjudication order.

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The court observed that the impugned order itself clearly stated that an appeal lay before the Commissioner (Appeals), Gurugram. It explained that the objections raised by the petitioner were not sustainable and could be raised before the appellate authority.

Seeing availability of an effective statutory appellate remedy, the High Court declined to exercise its writ jurisdiction and relegated the petitioner to the appellate forum. The writ petition was disposed.

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