Delhi HC Denies Relief to Accountant in ₹16 Cr GST Fraud Case- dismissed a writ petition
THE HIGH COURT OF DELHI
Sunil Gulati
v/s
Additional Commissioner CGST & Anr,
Date of Judgment: 9th April, 2025
W.P.(C) 4383/2025
Brief Facts:
Relevant Section
- Section 107 of the CGST Act, 2017
- Section 122(1A) of the CGST Act, 2017
The case of the Petitioner is that he was working as an accountant in M/s XEL Infomatics, M/s NexGen Busicorp and G W Infotech Pvt. Ltd. An investigation was conducted upon complaints received from the Ghaziabad Goods and Service Tax (hereinafter, ‘GST’) Commissionerate that one M/s Monga Iron and Steel Pvt. Ltd. was availing Input Tax Credit (hereinafter, ‘ITC’) fraudulently from fake/non-existing firms.
A visit to the premises of M/s Monga Iron and Steel Pvt. Ltd. is alleged to have revealed that the same was under the control of Mr. Yogesh Monga. During the investigation, various statements were recorded and a complete list of firms from whom the supplies were claimed to be received was also prepared.
On the ground of availment of ITC and on the basis of fake supplies, the Petitioner along with various other persons was even arrested by the CGST Department.
The statement of the Petitioner was also recorded on 16th March, 2023 and 17th March, 2023 under Section 14 of the Central Excise Act, 1944 as applicable to service tax and GST. Subsequently, a show cause notice bearing no.09/2024-25 was also issued on 12th July, 2024 (hereinafter, SCN’). In the statements recorded on 16th and 17th March, 2023, the Petitioner had given his address and also explained his role as under:
“Q4. Explain your role as Accountant in M/s XEL Informatics, M/s NexGen Buslcorp, M/s G W Infotech Pvt Ltd?
Ans. As Accountant in the above-named firms, my job is to generate sale invoices, e-way bills, maintain purchase bills and ledger entry of sell and purchase invoices in Tally software. The stock summary is also being maintained by me. I also prepare data to be provided to our Chartered Accountant for finalization of Balance Sheet and assisting them to conduct Internal Audit.”
The Delhi High Court Disposed a writ petition challenging a ₹16.15 crore GST Fraud Case for aiding fraudulent ITC claims while working as an accountant (Sunil Gulati). The Court held that since the impugned order was appealable under Section 107 of the CGST Act, and the petitioner had participated in proceedings and was aware of the show cause notice, writ jurisdiction could not be invoked. It allowed the petitioner to file an appeal within 30 days, which would be considered on merits without being dismissed on limitation grounds.
IMPORTANT PARAS
Para 14: The Court has considered the matter. A perusal of the SCN and the impugned order would show that there are various facts which are intricately connected to each other which has led to the finding by the adjudicating authority of the CGST Department that there was clear fraudulent availment of inadmissible ITC.
Para 15: The total number of firms which are set out in the impugned order as also the SCN would show that there are multiple individuals and multiple firms who have allegedly colluded with each other in order to enable this largescale allegedly fraudulent availment of ITC to the tune of almost Rs.20 crores.
Para 16: The role of the Petitioner as stated in the SCN itself and would show that as per the SCN he along with Mr. Yogesh Monga and Mr. Sunil Srivastava was aware of all the transactions. In the statement dated 16th March, 2023 and 17th March, 2023 itself, the Petitioner has stated that his job was to generate sale invoices, E-way bills, maintain purchase ledgers, purchase bills, entry of sale and purchase invoices in Tally.
Para 17: It is the case of the Petitioner that all these were maintained by him at the instance of his employers. Ld. Counsel for the Petitioner submits that the Petitioner has left the employment of the firm. However, on a specific query, it is informed that no specific date has been mentioned in the petition as to when he left the employment.
Thus, it cannot be presumed that the show cause notice was not served.
Moreover, since his statement was also recorded, he had complete knowledge of the proceedings. Thus, there is no jurisdictional error in the matter which warrants exercise of writ jurisdiction by this Court.
Para 22: In so far as the stand of the Petitioner that he has not retained the benefit of any transaction is concerned, the same would also be a factual issue which cannot be gone into in writ jurisdiction by this Court. The Petitioner would be free to raise this issue in appeal. Further, the argument that penalty could not have been imposed on the Petitioner for the Financial Years from 2017 can also be raised in appeal by the Petitioner.
Para 23: Ld. Counsel for the Petitioner at this stage submits that in view of the fact that no pre-deposit is payable in respect of the penalty amount, the present writ petition has been preferred solely on the issue of jurisdiction.
Para 24: Considering that all the issues which have been raised above can be clearly raised before the appellate authority, this is a fit case for directing the Petitioner to avail of his remedies under Section 107 of the CGST Act. Entertaining the present writ petition would in fact mean that all the factual issues would have to be gone into by this Court which would not be permissible. The Petitioner had full knowledge of the proceedings in the SCN.
Para 27. Considering the limitation period provided under Section 107 of the CGST Act, the Petitioner is given a further period of 30 days to enable him to file the appeal before the appellate authority. If the same is filed within 30 days from today, the same shall not be dismissed on the ground of being barred by limitation and shall be adjudicated on merits.
