Facts of the Case
• Petitioners include A & T Security Services Pvt. Ltd. and its directors challenging an order imposing GST penalty and imposition of tax demand.
• The petitioner company, engaged in security services, held GST Registration No. 07AAECA1356L1ZO.
• A show‑cause notice was issued in 2019 seeking cancellation of GST registration due to alleged non‑filing of returns.
• Despite filing returns and paying Rs. 2,01,20,299/‑, its registration was cancelled on 29th November 2019.
• The Appellate Commissioner restored the GST registration conditioned on filing overdue returns and tax liabilities.
• In 2024, a new show cause notice was issued alleging fraudulent availment of Input Tax Credit (“ITC”), leading to penalty proceedings.

Issue Involved
• Whether the adjudicating authority failed to consider payments already made and whether the penalty and tax demand order dated 31st January 2025 and appellate order dated 16th May 2025 were sustainable.

Petitioner’s Arguments
• Payments totaling over Rs. 2.01 crores were made prior to issuance of the 2024 show‑cause notice, which were ignored by the authorities.
• The impugned orders failed to consider this substantial deposit, affecting merits of penalty and demand.

Respondent’s Arguments
• Respondents conceded that the prior payments may not have been considered in the order.
• The penalty proceedings under Section 122 and other relevant provisions were pursued according to law.

Court’s Findings / Order
• Court observed that authorities ought to have considered the prior payments while adjudicating.
• The order dated 16th May 2025 was not examined on merits with full regard to evidence of payment.
• Directs that the petitioner may approach the newly constituted GST Appellate Tribunal without any pre‑deposit, considering prior payments.
• Appeals to be filed by 25th December 2025 and shall be heard on merits.

 

Important Clarification
• Pre‑deposits under GST are often required before admission of appeals; however, where substantive payments can be shown prior to notices, rigid pre‑deposit may be waived.
• The Court emphasised authority’s duty to consider substantial documentary proof before levying penalties.

Link to download the order - https://delhihighcourt.nic.in/app/showFileJudgment/75418112025CW169062025_175814.pdf 

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