M/S Surender Kumar Jain vs. Principal Commissioner CGST And Anr

Held

The Court held that it would not entertain the writ petitions. While acknowledging the general requirement for a personal hearing, the Court noted that the petitioners' reply to the SCN was ambiguous and failed to deal with the allegations on merits. The Court observed that the petitioners were aware of the investigation, the SCN was served, and a reply was filed. Furthermore, the Court noted that the impugned order is an appealable order under Section 107 of the CGST Act, and one co-noticee had already filed an appeal. The Court found that the factual analysis required to ascertain the petitioners' role, the justification of penalties, and the quantum of penalty could not be undertaken in writ jurisdiction. The Court granted the petitioners liberty to file an appeal under Section 107 of the CGST Act by July 15, 2025, along with the necessary pre-deposit, and directed that the appeal would be adjudicated on merits and not dismissed on grounds of limitation. Subsequently, the Court extended this date to January 31, 2026, for filing the appeal with the requisite pre-deposit.

Facts

The petitioners, M/s VDR Colors and Chemicals Pvt. Ltd., M/s A.V. Metals Marketing Pvt. Ltd., and M/s Surender Kumar Jain, challenged an order dated January 29, 2025, passed by the Assistant Commissioner (Adj.) CGST, Delhi North. This order followed a Show Cause Notice (SCN) dated May 21, 2024, which alleged fraudulent availment of Input Tax Credit (ITC) amounting to Rs. 18,24,11,655/- by the petitioners from non-existent firms. The allegations stemmed from a DGARM report concerning M/s Paramount Enterprises, which indicated purchases from various firms, including those supplying to the petitioners. The petitioners' primary contention was the non-grant of a personal hearing. The respondents relied on the impugned order's statement that personal hearing notices were issued but not attended by the petitioners or their representatives, leading to an ex-parte decision.

Key Issues

1. Whether the impugned order dated January 29, 2025, passed by the Assistant Commissioner (Adj.) CGST, Delhi North, is liable to be set aside on the ground of non-grant of a personal hearing to the petitioners, as mandated by principles of natural justice? Petitioner's argument: The petitioners contended that the non-grant of a personal hearing goes to the root of the matter and vitiates the impugned order. They argued that no proof of issuance of notices for personal hearing was placed on record by the respondents, and therefore, the order passed ex-parte was illegal. Revenue's argument: The respondents argued that the impugned order itself records that personal hearing notices were issued. They submitted that even if proof of dispatch could not be traced, the petitioners could not gain an advantage, especially given the alleged large-scale defrauding of the exchequer. They also pointed out that the petitioners' reply to the SCN was ambiguous and did not address the merits of the allegations, and that the petitioners had been aware of the investigation proceedings.