M/S. Blue Star International PVT. LTD. & Ors. vs. Union Of INDIA & Ors.

Held

The Court held that the Petitioners have an efficacious alternative remedy of appeal under Section 107 of the CGST Act, which they are not disputing. Consequently, the Court was not inclined to entertain the challenge to the Impugned Order in its writ jurisdiction. Regarding Section 122(1A), the Court noted that the issue of its temporal application is covered by a previous judgment of this Court in Parag Garg v. Commissioner, Adjudication, CGST, Delhi West & Anr. Concerning Section 155, the Court found that the grievance about unavailable records can be examined without reading down the provision. The statutory allocation of the burden of proof and the effect of missing documents are distinct. The Court stated that the Department's inability to furnish seized documents must be considered by the Appellate Authority when assessing whether the statutory burden has been discharged. All objections concerning the demand, interest, penalties, and appreciation of evidence were left open for the Appellate Authority. The Respondents were directed to rectify the erroneous repetition of the demand in Form GST DRC-07 within fifteen days, ensuring corrected summaries reflect the Impugned Order's demand, and pre-deposit for appeal would be based on the confirmed demand.

Facts

M/s. Blue Star International Pvt. Ltd. and its directors (Petitioners) filed a writ petition challenging an Order-In-Original dated 03.02.2025 passed by the Additional Commissioner, CGST Delhi South Commissionerate. The order confirmed a demand of ₹12,88,99,060/- against Petitioner No.1 for allegedly availing and utilising input tax credit (ITC) on invoices from non-existent suppliers without receiving goods. Penalties were also imposed on Petitioner No.1 and its directors. The proceedings stemmed from searches conducted on 17.11.2020. The Petitioners sought to set aside the order, read down Section 155 of the CGST Act regarding the burden of proof, and read down Section 122(1A) of the CGST Act as prospective. The Respondents acknowledged an error in Form GST DRC-07 where the demand was repeated.

Key Issues

1. Whether the Petitioners have an efficacious alternative remedy of appeal against the Impugned Order, and if so, whether the writ petition should be entertained. 2. Whether Section 122(1A) of the CGST Act, 2017, is prospective in nature, as argued by the Petitioners, or if this issue is covered by a previous judgment of this Court. 3. Whether Section 155 of the CGST Act, 2017, regarding the burden of proof for claiming ITC, should be read down due to the Department's alleged failure to return certain seized records, as contended by the Petitioners. The Petitioners argued that the absence of these records prevented them from proving their ITC eligibility and relied on an order where the Department stated seized documents were untraceable. The Respondents countered that available documents were supplied, and the unavailability of some records does not absolve the Petitioner of the burden under Section 155, with objections on documentary evidence being examinable by the Appellate Authority. 4. Whether the demand reflected in Form GST DRC-07 exceeds the amount specified in the Show Cause Notice and confirmed by the Impugned Order, contrary to Section 75(7) of the CGST Act, as argued by the Petitioners. The Respondents acknowledged a technical glitch leading to repeated summaries.