Facts of the Case

In W.P.(C)‑16906/2025 and connected matters, the petitioners — A and T Security Services Pvt Ltd and its directors, including Tejvir Malik, Rajesh Kumar Sharma and Vivek Kumar — challenged orders of the GST authorities relating to penalty and related adjudication proceedings under the Central Goods and Services Tax Act, 2017.

The petitioners operated a security services business and held a GST registration, which had been previously cancelled on account of alleged non‑filing of returns. After restoration of the GST registration by way of appeal order on deposit and compliance undertaking, the department issued a further show cause notice on the ground of alleged fraudulent availment of Input Tax Credit (ITC) on 31st July 2024.

A reply was filed to that SCN, and a personal hearing was conducted. The GST officer passed an order dated 31st January 2025, creating a demand under Section 122 of the CGST/SGST Act, imposing penalties. The appeal before the Commissioner (Appeals) upheld penalties and confirmed them on 16th May 2025. 

Issues Involved

  1. Whether the GST adjudicating and appellate authorities erred in concluding liability for penalty without considering substantial payments already made by the petitioners towards tax and related liabilities.
  2. Whether the petitioners should be afforded opportunity to file appeal before the GST Appellate Tribunal without the requirement of pre‑deposit of any amount.
  3. Whether the orders suffer from procedural and substantive error warranting judicial interference. 

Petitioner’s Arguments

Counsel for the petitioners — Mr. A.K. Babbar and Ms. Ishmat Kaur — submitted that a significant sum of Rs. 2,01,20,299/‑ had already been paid by the petitioners prior to the issuance of the show cause notice on 31st July 2024.

This crucial fact was not considered either by the adjudicating authority or by the Commissioner (Appeals). It was argued that this omission led to unjust confirmation of the penalty, and thus the orders ought to be set aside. 

Respondent’s Arguments

The respondents, represented by Senior Standing Counsel Mr. Akshay Amritanshu and other counsel, conceded that the aspect of substantial payment made by the petitioner did not appear to have been considered in the impugned appellate order dated 16th May 2025. However, no clear defense was advanced to negate the relevance of that fact. 

Court’s Order / Findings

The Delhi High Court (Justice Prathiba M. Singh & Justice Shail Jain) held that:

  • The payments made by the petitioners were relevant and ought to have been considered by the adjudicating as well as appellate authorities.
  • The appellate order is prima facie affected by non‑consideration of material facts.
  • Given that the GST Appellate Tribunal was now constituted and was accepting appeals, the petitioners should be permitted to allege their grievances at the Tribunal level.
  • The petitioners were allowed to file their appeal before the GST Appellate Tribunal without payment of any pre‑deposit if lodged by 25th December 2025.

Important Clarifications

  • The judgment confirmed that non‑consideration of material facts by the adjudicating authority and appellate body constitutes an error warranting judicial intervention.
  • The High Court underscored the importance of allowing appeals before the now‑functioning GST Appellate Tribunal without penal pre‑deposit where procedural fairness and balance of convenience so dictate.
  • The direction underlined that appellate remedies ought not be foreclosed on technical grounds where substantial compliance is demonstrated.

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

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