Writ Dismissed: Accountant Directed to File GST Appeal under Section 107

Case Summary:

• Case Title: Sunil Gulati v. Additional Commissioner CGST Delhi South Commissionerate & Anr.

• Court: High Court of Delhi

• Petition No.: W.P.(C) 4383/2025

• Category of Dispute: Penalty under Section 122(1A) – Input Tax Credit

• Date of Judgement: 9th April, 2025

• Relevant Section(s): Section 122(1A) & Section 107 of CGST Act, 2017

• Judges: Justice Prathiba M. Singh, Justice Rajneesh Kumar Gupta

Facts of the Case

[Para 2-9]

• The petitioner, Sunil Gulati, an accountant with M/s XEL Informatics, NexGen Busicorp, and G W Infotech Pvt. Ltd., challenged the penalty order dated 16.01.2025 amounting to ₹16.15 crore.

• The penalty arose from an investigation into fraudulent Input Tax Credit (ITC) availed by M/s Monga Iron and Steel Pvt. Ltd.

• The petitioner’s statements were recorded under Section 14 of the Central Excise Act, where he admitted his role in generating sale invoices, maintaining purchase records, and preparing accounts.

• The premises inspected had no stock of iron and steel and were instead found stocked with garments.

• The CGST authority concluded that the firms, including those where the petitioner worked, facilitated fraudulent ITC totalling nearly ₹20 crore.

Question(s) in Consideration

[Para 10]

1. Was the show cause notice (SCN) duly served on the petitioner?

2. Could a penalty be imposed under Section 122(1A) for transactions predating 01.01.2021?

3. Could an accountant who did not personally benefit from the transactions be penalized under Section 122(1A)?

4. Was the writ petition maintainable in light of the statutory appeal remedy under Section 107 of the CGST Act?

Observations of the Court

[Para 14-24]

• The Court noted the SCN was sent to the official email address of the accounts department and the petitioner did not dispute using it.

• The Court held that there was no jurisdictional error as the petitioner had full knowledge of the proceedings and had provided his address during the statement.

• It was noted that the petitioner failed to specify when he left the employment, undermining the claim of non-service.

• Since the order was appealable under Section 107, the writ petition was not maintainable.

• Issues like whether the petitioner retained any benefit or the retrospective applicability of Section 122(1A) were deemed factual and not fit for writ adjudication.

Judgment of the Court

[Para 25-28]

• The writ petition was dismissed.

• The petitioner was granted 30 days from the date of the order to file an appeal under Section 107 of the CGST Act.

• The appellate authority was directed not to reject the appeal on limitation grounds if filed within that period.

Between Fine Lines (Simplified Summary)

• Accountant penalized for helping generate fake invoices linked to fraudulent ITC.

• Argued he didn’t benefit and wasn’t served notice personally.

• Court held he had knowledge and remedy lies in appeal, not writ.

• Dismissed writ but gave 30 days for appeal filing.

• Factual arguments to be made before appellate authority.

Summary of Referred Cases

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