Ambika Traders Through Vs Additional Commissioner (Delhi High Court)

In the recent case of Ambika  Traders Through Proprietor Gaurav Gupta Vs Additional Commissioner, Adjudication DGGSTI ,CGST Delhi North, Delhi High court, held that case where a substantial amount of fradulent ITC is alleged to have been availed/utilized A consolidated notice is, not only permissible but, in fact, required in such cases in order to establish the illegal modality adopted by such businesses and entities. The language of the provision itself does not prevent issuance of SCN or order for multiple years in a consolidated manner.Fact of the case;- The Petitioner is a registered sole proprietorship  and dealing in metal scrap. a search operation was carried out at the residential premises as also at its sales office. Various records/files were resumed by the GST Department from the said premises, followed by the arrest of Proprietor.A Show Cause Notice for demand on the ground of alleged fraudulent availment and wrongful passing on of Input Tax Credit. A detailed reply was filed by the Petitioner to the SCN, however order confirming the demand of tax along with a penalty of an equivalent amount.Analysis of the court.During the adjudication of SCN, Adjudicating Authority comes to the conclusion that the behaviour of the noticee i.e., the Petitioner has been evasive. There was no attempt on behalf of the Petitioner to explain and justify the availment of ITC. The Adjudicating Authority holds that there was no receipt of any goods nor supply of any goods.In a case of fraudulent availment of ITC or utilization of ITC, the best evidence for a person who is genuinely conducing a business would be to state the exact nature of the goods sold, the quantities purchased/sold, etc. There is, prima facie, no averment in the reply or theAdditional reply giving such details. the language used in Section 74(3) of the CGST Act and Section 74(4) of the CGST Act is “for any period” and “for such periods” respectively. This contemplates that a notice can be issued for a period which could be more than one financial year. Whereas in contrast with the language used in Sections 73(10) and 74(10) of the CGST Act where the term “financial year” is used. The Legislature is conscious of the fact that insofar as wrongfully availed ITC is concerned, the notice can relate to a period and need not to be for a specific financial year.The nature of ITC is such that fraudulent utilization and availment of the same cannot be established on most occasions without connecting transactions over different financial years. The purchase could be shown in one financial year and the supply may be shown in the next financial year. It is only when either are found to be fabricated or the firms are found to be fake that the maze of transactions can be analysed and established as being fraudulent or bogus.The present case appears to be one such case where a substantial amount of ITC is alleged to have been availed/utilized running into more than Rs.83 Crores. The Petitioner is alleged to be one of the main entities/persons involved in the said activity. The transactions are between the years 2017 to 2021. A consolidated notice is, therefore, not merely permissible but, in fact, required in such cases in order to establish the illegal modality adopted by such businesses and entities. The language of the provision itself does not prevent issuance of SCN or order for multiple years in a consolidated manner.It is well settled in various decisions of the Supreme Court that petitions under Article 226 of the Constitution of India would be liable to be entertained only in case of persons who come with clean hands and not in favour of the persons who present twisted facts or misrepresent the true and correct picture on record.Conclusion by the court.Since the Petitioner has an alternative, effective and efficacious remedy available, court rejected / dismissed the writ. Court directed to file the appeal with appellate authority.