High Court Rejects Transporter’s Plea Against GST Penalty Over Alleged Fake Firms

The petitioner, Niraj Ram Kumar Tiwari, proprietor of M/s. Maa Logistics Transport Company, challenged a show-cause notice dated January 28, 2025, and a later Order-in-Original.

The tax authorities, following an investigation, alleged that the petitioner was the actual owner of another firm, M/s. Mahalaxmi Transport, and had orchestrated the creation of eight fake firms through an associate, Shri Dilshad Alam.

These firms were allegedly used for the clandestine removal of goods and the illegal availment of Input Tax Credit (ITC) with the intent to evade tax. The petitioner contended that he had no connection with the alleged fake firms and that the investigation was flawed, specifically noting that certain Relied Upon Documents (RUDs) were not provided during the proceedings.

Main Issue: Whether the High Court should exercise its writ jurisdiction to quash a GST demand and penalty when the petitioner has an alternate efficacious remedy (filing an appeal) but seeks to avoid the mandatory pre-deposit requirement.

HC’s Ruling: The High Court dismissed the writ petition, refusing to interfere with the Order-in-Original. The Court noted that despite being offered the opportunity to avail of the statutory appellate remedy under Section 107 of the CGST Act, the petitioner’s counsel insisted on a decision on merits to avoid the financial burden of the mandatory pre-deposit.

The Court held that the adjudicating authority had passed a detailed order after considering the evidence of clandestine transportation and suppression of facts. Thus, the Court ruled that the petitioner must approach the appellate authority to contest these factual findings, and a writ petition cannot be used to bypass the statutory process.

To Read Full Judgment, Download PDF Given Below