Siya Seth Proprietor - Spherion Solutions vs. Additional Commissioner Adjudication CGST Delhi North & Ors.

Facts

The petitioners, including Siya Seth (Proprietor - Spherion Solutions) and Spherion Solutions Private Limited, filed writ petitions challenging a common order dated 25.03.2026 passed by the Additional Commissioner Adjudication, CGST Delhi North. This order was passed against 154 noticees, stemming from an investigation where Mr. Pankaj Jha was identified as orchestrating a syndicate involving 113 fake firms for availing Input Tax Credit (ITC) through invoices without actual supply of goods. The investigation involved searches, seizure of documents, and recording of statements. The petitioners sought various reliefs, including quashing the impugned order and show cause notice, and challenging the imposition of penalties under Section 122(1) of the CGST Act.

Held

The Court held that the present writ petitions were not maintainable at this stage, primarily because the petitioners have a statutory remedy of appeal under Section 107 of the CGST Act. The Court noted that the petitioners' contentions regarding violation of principles of natural justice, lack of prescribed limitation period under Section 127, initiation of proceedings by the Proper Officer, and the classification of liability under different sub-sections of Section 122 (122(1), 122(1A), or 122(3)) all involve examination of statutory provisions in the context of factual findings recorded in the impugned common order. These issues can be appropriately examined by the Appellate Authority. The Court found no ground to entertain the writ petitions bypassing the statutory appellate remedy. However, regarding the pre-deposit requirement, the petitioners were granted liberty to avail the benefit of the Court's judgment in Gaurav Jain and Anr. v. Joint Commissioner (Appeals-II), CGST Delhi Zone & Anr., subject to its applicability and fulfillment of conditions.

Key Issues

1. Whether the imposition of identical penalties under Section 122(1) of the CGST Act for the same transactions, after penalizing the alleged mastermind under Section 122(1A), results in duplicative, excessive, and disproportionate penalties in violation of the Doctrine of Proportionality? (Relates to Section 122(1) and Section 122(1A) of the CGST Act). 2. Whether, in the absence of a prescribed period of limitation under Section 127 of the CGST Act, the time limit to issue an order imposing penalty under Section 122 of the CGST Act cannot exceed three years from the date of the alleged contravention? (Relates to Section 127 and Section 122 of the CGST Act). 3. Whether the proviso mandating pre-deposit of 10% on penalty under Section 107(6) of the CGST Act is prospective and cannot be applied retrospectively to offences prior to its introduction, as it restricts the statutory remedy of appeal? (Relates to Section 107(6) of the CGST Act). Petitioner's arguments: The respondents violated principles of natural justice; no period of limitation is prescribed under Section 127; proceedings were not initiated by the Proper Officer; and liability should be confined to the mastermind under Section 122(1A), with petitioners falling under Section 122(3). Revenue's arguments: Not recorded in the judgment.