M/S A V Metals Marketing PVT LTD vs. Principal Commissioner CGST And Anr

Held

The Court held that it would not entertain the writ petitions. The reasoning was that the impugned order was appealable under Section 107 of the CGST Act. The Court noted that one of the co-noticees, who is also the son of a petitioner, had already filed an appeal. Furthermore, the Court observed that the writ jurisdiction should not be exercised to support unscrupulous litigants, and factual analysis required for such cases cannot be undertaken in writ proceedings. The Court found that the petitioners had not dealt with the allegations on merits in their reply to the SCN. Given that the time for filing an appeal had lapsed, the Court granted the petitioners liberty to file an appeal by January 31, 2026, along with the necessary pre-deposit. If filed within this extended period, the appeal would not be dismissed on grounds of limitation and would be adjudicated on merits. Any observations made by the High Court were not to impact the final adjudication by the appellate authority.

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 approximately Rs. 18.24 crore. The allegations stemmed from a DGARM report concerning M/s Paramount Enterprises, which indicated purchases from non-existent firms. The petitioners' primary contention was that the impugned order was passed without granting them a personal hearing, despite their reply to the SCN. The revenue contended that personal hearing notices were issued and the petitioners failed to appear, compelling an ex-parte decision based on available evidence.

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 for non-compliance with the principles of natural justice due to the alleged non-grant of a personal hearing to the petitioners, as required by the CGST Act and Rules? Petitioner's arguments: The petitioners argued that the non-grant of a personal hearing goes to the root of the matter and renders the impugned order invalid, as no proof of issuance of personal hearing notices was placed on record by the respondents. They contended that the impugned order was passed without affording them a proper opportunity to be heard. Revenue's arguments: The respondents argued that the impugned order itself records that personal hearing notices were issued. They further contended 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 asserted that the petitioners were aware of the proceedings, had filed a reply to the SCN, and had even retracted statements, indicating overall compliance with natural justice principles.