Mahesh Kumar Agarwala vs. The Union Of INDIA And 3 Ors.
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The petitioner, Mahesh Kumar Agarwala, proprietor of M/s Ganesh Enterprise, challenged an order dated 30.09.2025 passed under Section 74 of the CGST Act. This order confirmed a demand of Rs. 7,59,52,817/- along with interest and penalty, alleging wrongful availment of Input Tax Credit (ITC). The petitioner argued that Section 74 was wrongly invoked as there was no misstatement or suppression of facts. The respondents contended that the impugned order was reasoned, with specific findings on misstatement and suppression related to fake invoices and the absence of e-way bills for goods transported from Meghalaya to Bongaigaon, Assam.
Held
The Court held that the invocation of Section 74 of the CGST Act was not per se wrong, as the impugned order contained specific findings regarding misstatement and suppression of material facts, including the submission of fake invoices and the absence of e-way bills. Regarding the pre-deposit requirement for statutory appeals, the Court found that such a direction to waive the pre-deposit could not be granted, especially when it is a statutory requirement and no extraordinary circumstances were demonstrated by the petitioner. The Court noted that its observations were tentative and would not prejudice the petitioner if an appeal was filed and adjudicated on its merits. The writ petition was dismissed.
Key Issues
1. Whether Section 74 of the CGST Act was wrongly invoked by the revenue authorities in the absence of misstatement and suppression of material facts by the petitioner? (Question of law) 2. Whether the statutory appeal provision requiring pre-deposit of 10% of the disputed amount is onerous and can be waived or reduced by the High Court in its writ jurisdiction? (Question of law) Petitioner's Arguments: - Section 74 of the CGST Act was wrongly invoked as there was no misstatement or suppression of material facts. - The provision for preferring an appeal is onerous due to the mandatory pre-deposit requirement. Revenue's Arguments: - The impugned order is reasoned and contains specific findings on misstatement and suppression of material facts, particularly concerning the submission of fake invoices and the lack of e-way bills from toll plaza records for transportation from Meghalaya to Bongaigaon.
Sections Cited
Section 74
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Cause title — parties, addresses and appearances
ORDER 09.03.2026 Heard Ms. BS Goyal, learned counsel for the petitioner, who has put to challenge an order dated 30.09.2025 passed under Section 74 of the CGST Act confirming a demand of Rs.7,59,52,817/- with interest and penalty on the allegation of wrongful availment of Input Tax Credit (ITC).
Also heard Shri K. Jain, learned counsel appearing on instruction of Shri S.C.Keyal, learned Senior Standing Counsel, CGST.
It is contended by Ms. Goyal, learned counselfor the petitioner that there is wrong invocation of Section 74 of the Act which essentially requires misstatement and suppression which is not there in the instant case. She has also submitted that though there is a provision for preferring appeal, the said provision is onerous inasmuch as, it requires pre-deposit of 10% of the amount involved.
Shri Jain, the learned counsel for the respondents has however submitted that the impugned order is a reasoned one wherein there is a specific finding on the aspect of misstatement and suppression of material facts which is in connection with submission of fake invoices.He has submitted that there is a Page No.# 3/4 specific finding that there was no e-way bills from the records of the toll plaza enroute from Meghalaya to Bongaigaon (Assam).
A bare perusal of the impugned order dated 30.09.2025 would reveal that the same has cited reasons for coming to the conclusion. The order also appears to have taken into consideration the relevant factors.It is trite law that while exercising certiorari juri iction, this Court is not required to go to the adequacy and sufficiency of reasons, unless the reasons are absolutely perverse or accentuated by mala fide.
This Court has also noticed that there is a specific prayer for allowing the petitioner to prefer a statutory appeal without insisting on the mandatory pre- deposit. For ready reference, the relevant part of the relief prayed for is extracted hereinbelow: “In the premises aforesaid it is humbly prayed that this Hon'ble Court may be pleased to call for the records, issue notice calling upon the respondents to show cause as to why a Writ in the nature of Mandamus and/or Certiorari be not issued calling upon the respondents to show cause as to why the Writs/Directions prayed for shall not be issued and on cause or causes shown and after hearing the parties be pleased to- a) … b) … c) Issue a Writ in the nature of Mandamus, directing Respondent No.3 to entertain the Petitioner's statutory appeal without insisting on mandatory pre-deposit or upon such reduced deposit/security as this Hon'ble Court deems fit; d) …
Page No.# 4/4 INTERIM RELIEF: In the interim be pleased to: i) … ii) Direct the respondents to allow the petitioner to file the appeal to save the limitation, Petitioner undertakes to furnish reasonable security / bond to protect revenue interest pending appeal. iii) …”
In the considered opinion of this Court, such direction to wave the pre- deposit cannot be granted, more so when the requirement is a statutory one and no extraordinary circumstance has been able to be demonstrated in the instant case.
In view of the above facts and circumstances, the writ petition stands dismissed.
It is however made clear that the observations made in this order are tentative and will not cause any prejudice to the petitioner, if an appeal is filed and the same is to be adjudicated strictly on its merits. JUDGE Comparing Assistant
Reproduced from the public record of the Gauhati High Court. Verify against the court's own copy before relying on it. Income tax judgments are on bharattax.net.