Facts of the Case

The petitioner, Sunil Gulati, was working as an accountant in multiple firms. An investigation was initiated by the GST authorities based on allegations that M/s Monga Iron and Steel Pvt. Ltd. had fraudulently availed Input Tax Credit (ITC) through fake and non-existent firms.

During investigation:

  • Statements of various individuals including the petitioner were recorded under Section 14 of the Central Excise Act.
  • The petitioner admitted his role involved generating invoices, maintaining accounts, and preparing financial records.
  • Authorities found absence of actual goods at business premises, indicating bogus transactions.

A Show Cause Notice (SCN) was issued, followed by an Order-in-Original dated 16 January 2025, imposing a penalty of approximately ₹16.15 crore on the petitioner for alleged involvement in fraudulent ITC availment.

Issues Involved

  1. Whether the writ petition is maintainable despite availability of an alternative statutory remedy under Section 107 of the CGST Act.
  2. Whether non-service of the Show Cause Notice invalidates the proceedings.
  3. Whether penalty under Section 122(1A) can be imposed on an accountant who allegedly did not benefit from the transactions.
  4. Whether retrospective application of Section 122(1A) is permissible. 

Petitioner’s Arguments

  • The Show Cause Notice was not served upon him properly.
  • Section 122(1A) came into force on 01.01.2021 and cannot be applied retrospectively to earlier transactions.
  • Being merely an accountant, he neither initiated transactions nor derived any benefit.
  • The writ petition was filed on jurisdictional grounds, avoiding pre-deposit requirements.
  • The petitioner expressed willingness to participate in appellate proceedings if permitted.

Respondent’s Arguments

  • The SCN was validly served via email used by the petitioner in the accounts department.
  • The petitioner had full knowledge of proceedings, evidenced by recorded statements.
  • The impugned order is appealable under Section 107 CGST Act, hence writ is not maintainable.
  • The case involves complex factual issues and multiple entities, unsuitable for writ jurisdiction.

Court’s Findings / Order

The Delhi High Court held:

  • The matter involves intricate factual disputes, including alleged collusion among multiple firms and individuals.
  • The petitioner had knowledge of proceedings, and service of SCN cannot be disputed.
  • Issues such as:
    • Role of the petitioner
    • Applicability of penalty
    • Retrospective effect
      are questions of fact, not suitable for writ jurisdiction.
  • The impugned order is clearly appealable under Section 107 CGST Act.

Final Order:

  • The writ petition was dismissed as not maintainable.
  • The petitioner was granted 30 days additional time to file an appeal.
  • The appellate authority was directed to decide the matter on merits without limitation bar.

Important Clarifications

  • Writ jurisdiction cannot be invoked where an effective statutory remedy exists, especially in tax matters.
  • Accountants or intermediaries may still be implicated if factual involvement is established.
  • Service of notice via official email can be considered valid service.
  • Complex GST fraud cases involving multiple parties must be adjudicated in appellate forums, not writ courts.

Link to download the order -  https://delhihighcourt.nic.in/app/showFileJudgment/68909042025CW43832025_185618.pdf

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