SD Polymers v. Commissioner of Central Goods and Service Tax

1. This hearing has been done through hybrid mode. CM APPL. 49311/2025

2. Allowed subject to all just exceptions. Accordingly, the application is disposed of. W.P.(C) 12062/2025 & CM APPL. 49312/2025

3. The present petition has been filed by the Petitioner under Article 226 of the Constitution of India, inter alia, assailing the Show Cause Notice dated 5th August, 2024 (hereinafter, ‘SCN’) issued for the Financial Year 2017-18. The Petitioner further challenges the Order-in-Original dated 1st February, 2025 along with the Form DRC-07 dated 9th February, 2025 (hereinafter, ‘impugned order’). Vide the impugned order a demand to the tune of Rs. 2,18,24,370/- has been raised against the Petitioner.

4. On behalf of the Petitioner, two submissions have been made by the ld. Counsel. Firstly, the reply dated 27th August, 2024, which has been filed by the Petitioner to the SCN, which led to the passing of the impugned order has not been considered by the Central Goods and Service Tax Department (hereinafter, ‘Department’). Secondly, it is submitted that no opportunity of personal hearing has been afforded to the Petitioner by the Department. In addition, the plea of limitation has also been raised by the Petitioner.

5. Coming to the plea of limitation, it is seen that the impugned order is dated 1st February, 2025, however, it appears that the Form DRC-07 was uploaded on 9th February, 2025 on the GST Portal of the Petitioner.

6. Mr. Shashank Sharma, ld. SSC submits that the impugned order was issued by the Department within the prescribed limitation period, however, due to a technical glitch, it may have been uploaded on the GST Portal on a later date.

7. Be that as it may, insofar as the reply dated 27th August, 2024, which has been filed by the Petitioner to the SCN dated 5th August, 2024 is concerned, the impugned order dated 9th February, 2025 itself records as under: “4. SUBMISSIONS OF THE NOTICEES AND

RECORDS OF PERSONAL HEARING: Following the principle of natural justice, the noticees were granted personal hearings (PH) on 21.11.2024, 16.12.2024 & 26.12.2024. However, replies from Noticee No. 14, 70 and 86 were received whereas for rest of the noticees neither the noticees nor any of their authorized representatives appeared before the Adjudicating Authority for personal hearing on the said dates. Thus, on the basis of available facts and records, I proceed to examine the instant case.

5. DISCUSSION & FINDINGS:- 5.[1] I have carefully gone through the facts of the case, available case records and the allegations as per the subject SCN. It is seen that the Noticees had not submitted any written submission and also did not appear for personal hearing. Personal Hearings were granted on 21.11.2024, 16.12.2024 & 26.12.2024. However, replies from Noticee No. 14, 70 and 86 were received which have been duly considered. As per reply of Noticee No. 70 & 86 the amount mentioned below has been deposited: Notice e No. Name of the taxpayer Tax (in Rs.) Interest (in Rs.) Penalty (in Rs.) DRC-03 ARN NO. 70 CREATIVE INDUSTRIES 2,94,658/ - 1,59,114/ - 44,198/ - AD070221011382 T 86 AAR BEE ENGINEERIN G WORKS 1,31,406/ - 70,960/- 19,710/ - ADO70221011376 N For Noticee No. 86, I find that vide their reply dated 03/01/2025 received on 06/01/2025 to the DRC-01 in the matter, the taxpayer submitted various points i.e. that Section 74 was not applicable in case of records of the taxpayer as there was no suppression of facts, fraud, mis-statement of malafide intention to evade the tax by the taxpayer; that the taxpayer submitted various case laws in support of their above mentioned claims. Further, I find that the taxpayer submitted point-wise reply to the observations on merit. However, on going thoroughly through the reply/points submitted; case laws quoted by the noticee. In this regard I find that on going through the case laws/submissions made by the party, the provided case laws do not squarely cover all the four corners of this issue as each and every case has different facts and circumstances. In other words, I note that the decision is to be made on case to case basis and the reliance can be placed only when the case facts tally with the facts of the case. Therefore, the submissions/case laws/reply submitted by the noticee is neither relevant to this case nor tenable. On submissions made point-wise, also, I find that the taxpayers submissions are not in line with the audit observations and data available on portal, hence found not tenable. Whereas, for rest of the noticees neither the noticees nor any of their authorized representatives appeared before the Adjudicating Authority for personal hearing on the said dates. Hence, I am of the considered view that in the present case, Principle of Natural Justice as well as Principle of Adjudication has been duly followed and opportunities have been provided to the Noticees to put forth their defence in personal hearing. I find that the noticees had failed to avail the opportunity of personal hearing and therefore forfeit their claim in future related to violation of natural justice. I find it relevant to refer to the judgment of Hon'ble CESTAT in the case of V.K. Thampt Vs. Collector of Customs and Central Excise, Cochin [1988 (033) ELT 0424], wherein Hon'ble Tribunal inter alia held at para 7 that "an adjudicating authority is entitled to proceed ex parte if the person concerned does not appear before it in response to a notice issued by it." Thus, I have no option but to adjudicate the present case ex-parte on the basis of records available in this case.”

8. From the paragraphs extracted hereinabove, it is clear that the replies to the SCN were given by some of the noticees and the same were considered. It is, however, unclear as to whether the Petitioner’s reply was even dispatched or sent to the Adjudicating Authority within time or not. Ld. Counsel for the Petitioner, however, points out that there is a faint stamp on the reply dated 30th August, 2024, which shows that the same was received by the Department.

9. However, this Court is of the view that an important issue in this case is that it involves allegation of fraudulent availment of Input Tax Credit (hereinafter, ‘ITC’) by several parties. A perusal of the impugned order shows that there are several non-existing firms, which are stated to have raised goodsless invoices and passed on credit to 106 noticees. Vide the impugned order, demands have been raised against various parties along with penalties.

10. The Petitioner’s name appears at serial no.12 in the list of noticees and the allegation raised upon the Petitioner is that the fraudulent ITC passed on is to the tune of Rs.1,45,49,580/-.

11. The total demand raised qua the Petitioner is as under:

12. A perusal of the SCN dated 5th August, 2024 reveals wrongful availment of ITC and its utilization by 106 noticees during FY 2017-18 on the basis of the goods-less invoices issued by non existent firms as under:

13. Moreover, the allegation in the said SCN is that two individuals namely Mr. Rajesh Jindal and Mr. Adesh Jain had created, controlled and managed a large number of fake firms, which were opened in the names of different individuals and were not genuine businesses or business persons.