Shri Sugan Traders v. Commissioner of Central Goods and Services Tax

1. This hearing has been done through hybrid mode.

2. The present petition has been filed by the Petitioner challenging the order dated 3rd February, 2025 wherein a demand of Rs. 6,942,504/- has been raised, as also the order dated 9th February, 2025, wherein a demand of Rs. 1,21,49,568/- (hereinafter, ‘the impugned orders’) has been raised against the Petitioner.

3. On behalf of the Petitioner, two submissions have been made by the ld. Counsel. Firstly, the reply dated 30th August, 2024, which has been filed by the Petitioner to the two Show Cause Notices dated 5th August, 2024 which led to the passing of the impugned orders has not been considered by the Departments.

4. Secondly, it is submitted that the personal hearing was also attended by the Petitioner, but the same does not find a mention in the impugned orders. In addition, the plea of limitation has also been raised by the Petitioner.

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

6. Mr. Harpreet Singh, ld. Sr. Standing Counsel submits that the impugned orders were issued by the GST Department within the prescribed limitation period, however, due to a technical glitch, they may have been uploaded on the GST Portal on a later date.

7. Be that as it may, insofar as the reply dated 30th August, 2024, which has been filed by the Petitioner to the two Show Cause Notices 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. Furhter, 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 show cause notice 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 orders show that there are several non-existing firms, which have claimed to have raised goods-less invoices and passed on credit to 176 noticees. The total amount, which is sought to be demanded from various parties, is to the tune of Rs.8.83 crores for financial year 2017-18. In addition, penalties have also been imposed on the noticees.

10. The Petitioner’s name appears at serial no.117 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.21,06,027/-. In the second SCN dated 5th August, 2024, the ITC passed on is alleged to be to the tune of Rs.80,99,712/-.

11. The total demands, which have been raised, are as under:

12. Considering that these are cases of fraudulent availment of ITC and there are a large number of noticees involved in the alleged transactions, this Court is of the opinion that the Petitioner ought to be relegated to avail of its appellate remedy, rather than entertaining a writ petition.

13. Insofar as the non-consideration of the reply filed by Petitioner is concerned, the Petitioner is free to file an appeal raising the said contentions, along with any other documents it relies upon in support of its appeal.