Delhi High Court Directs Petitioner to Exhaust Appellate Remedies in GST Fraud Case

Court mandates appeal without limitation dismissal for fraudulent Input Tax Credit allegations against Manikjeet Singh Kals

In a significant ruling, the Delhi High Court has directed Manikjeet Singh Kals, the proprietor of M/s. Bharat Facilities, to pursue appellate remedies under the Goods and Services Tax (GST) Act, in response to allegations of fraudulent availment of Input Tax Credit (ITC). The court emphasized that if Kals files an appeal by January 31, 2026, along with the required pre-deposit, it should not be dismissed on the grounds of limitation.

The case involves complex allegations against multiple entities across various cities, accused of participating in a fraudulent scheme to claim ITC without actual supply of goods and services. The scheme was reportedly orchestrated by one Gagan Kumar, who allegedly operated a network of fake firms issuing counterfeit invoices.

Kals challenged the impugned order issued by the Joint Commissioner, South Delhi, which imposed various demands based on the alleged fraudulent activities. His legal counsel raised two primary objections: firstly, that the show cause notice should have been issued by a higher authority within the Directorate General of GST Intelligence (DGGI), and secondly, ambiguity regarding the appropriate appellate authority due to dual proceedings in Delhi and Faridabad.

Responding to these submissions, the court clarified that the appeal should be filed with the Commissioner (Appeals), Gurugram, as per the territorial jurisdiction outlined in Circular No. 250/07/2025-GST. This directive aligns with the CGST Act, 2017, and Notification No. 02/2017-Central Tax, which stipulates that appeals against orders from Common Adjudicating Authorities should be filed with the corresponding Commissioner (Appeals).

The court's decision underscores the procedural framework for adjudicating show cause notices involving multiple noticees, emphasizing the role of jurisdictional Commissionerates based on the highest tax demand. The ruling further highlights the importance of adhering to established appellate procedures for GST disputes, ensuring that such cases are evaluated on their merits rather than procedural technicalities.

The Delhi High Court's judgment serves as a crucial reminder of the appellate mechanisms available under the GST regime, particularly in cases involving allegations of tax fraud. As the petitioner seeks to contest the impugned order, the court's directive provides a clear path for legal recourse, reinforcing the procedural rigor required in tax adjudication processes.

Bottom Line:

Goods and Services Tax (GST) - Allegations of fraudulent availment of Input Tax Credit (ITC) - Petitioner directed to exhaust appellate remedy provided under the GST Act - Appeal not to be dismissed on limitation grounds if filed within the stipulated time along with pre-deposit.

Statutory provision(s):  

• - Goods and Services Tax (GST) Act, Sections 107, 108  
• - Circular No. 250/07/2025-GST  
• - Circular No. 31/05/2018-GST  
• - Notification No. 02/2017-Central Tax

Manikjeet Singh Kals v. Union of India, (Delhi)(DB) : Law Finder Doc Id # 2822386