High Court: No Writ Against allowed Rs. 285 Cr GST Penalty against GST consultant, Use alternate statutory appellate remedy

The assessee, a GST consultant, was issued a penalty order for Rs. 285.66 crore under Section 122(1A) of the CGST Act for allegedly assisting in the creation of fake firms that passed on fraudulent Input Tax Credit (ITC) worth hundreds of crores. The Directorate General of GST Intelligence (DGGI) had earlier issued a show cause notice (SCN) based on statements and documents implicating the petitioner and his associates in creating 63 non-existent entities, 54 of which were used for fake billing.

The petitioner challenged the penalty before the High Court, arguing that no SCN was issued under Section 122(1A), making the penalty void, and he was only a consultant and not a beneficiary.

Issue Raised: Whether the Rs. 285 crore fine imposed under Section 122(1A) of the CGST Act, which was based on alleged involvement in setting up and running fictitious businesses for fraudulent ITC, can be directly contested through a writ petition without using the statutory appellate remedy.

High Court’s Decision: The Court noted that the petitioner’s own recorded statements showed active knowledge and involvement in the setup of shell firms. While refusing to entertain the writ, it granted liberty to file a statutory appeal.

Since the petitioner’s involvement in the alleged fraud raised complicated factual issues that were inappropriate for writ adjudication, the Hon’ble High Court dismissed the writ petition. The Court allowed the petitioner to file a statutory appeal within one month, despite the limitation period having expired.

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