2026-VIL-1067-DEL
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SGST High Court Cases

GST - Consideration of Reply in Adjudication Order - Omission to Reproduce Reply in Order - Section 74 and 75(6) of CGST Act, 2017 - Petitioner filed detailed reply with voluminous compilation of supporting documents and appeared through counsel for personal hearing - Adjudication Order confirmed demand against petitioner but did not reproduce the reply in the order though it referred to written submissions and personal hearing, and petitioner contended that order violates Sections 74(9) and 75(6) requiring consideration of reply and statement of relevant facts and basis of decision - Whether non-reproduction of petitioner's reply in adjudication order establishes that reply was not considered - HELD - Mere non-reproduction of reply in order would not establish that it was ignored. What is material is whether order notices substance of defence and discloses basis on which claim has been rejected. Conversely, a general recital that replies have been considered cannot cure an order which otherwise discloses no reasons - In present case, filing of reply and appearance of petitioner's advocate at personal hearing are not disputed and reference in order to written submissions discloses that adjudicating authority considered reply. Though reasoning was common to noticees and did not separately analyse work orders, invoices and ledgers relied upon by petitioner, it disclosed basis on which claim to ITC was rejected by finding that invoices were unsupported by actual supplies and conditions for availing ITC were not fulfilled and that noticees failed to discharge burden cast under Section 155 - Examination of contention that documents place petitioner establish facts unproved by adjudicating authority would require matching of work orders issued with subcontracts, invoices, payments and evidence of execution, which can be effectively examined in appeal - The omission to reproduce reply does not warrant setting aside adjudication in exercise of writ jurisdiction – The writ petitions are disposed of - Jurisdiction of DGGI - Adjudication of common SCN - Jurisdiction of DGGI to proceed against taxpayers administratively assigned to State tax authorities – Validity of allocation of adjudication to Additional Commissioner Delhi North when common SCN involves noticees in multiple Commissionerates - Petitioner held three separate GST registrations in Karnataka, Tamil Nadu and Telangana administratively assigned to State tax authorities - DGGI Regional Unit conducted investigation into alleged chain of invoices issued without corresponding supplies extending across several States and issued common SCN to noticees including petitioner. Adjudication was allocated to Additional Commissioner CGST Delhi North - Whether administrative allocation of taxpayers assigned to State tax authorities excludes jurisdiction of DGGI to investigate and proceed and whether Additional Commissioner Delhi North had jurisdiction to adjudicate common SCN involving noticees in multiple Commissionerates - HELD - Notification 14/2017-Central Tax appoints specified DGGI officers as Central tax officers and confers upon them powers exercisable by officers of corresponding rank throughout India. Administrative allocation of taxpayers does not exclude intelligence-based enforcement by other tax administration. Investigation arising from intelligence concerning alleged chain of transactions extending across several States is within DGGI jurisdiction. For adjudication of common SCN with noticees in more than one Commissionerate, allocation to Additional/Joint Commissioner of Commissionerate where principal place of business of noticee carrying highest tax demand falls is governed by Notification 02/2022-Central Tax dated 11.03.2022 and Circular 169/01/2022-GST dated 12.03.2022. Where highest tax demand against noticee falls within Delhi Zone, designated Commissionerate is Delhi North. Notification 27/2024-Central Tax dated 25.11.2024 and Circular 239/33/2024-GST dated 04.12.2024 do not alter this allocation - Jurisdictional objection is rejected - Applicability of Circular 171/03/2022-GST to Recovery under Section 74 - Invoices without underlying supplies - Petitioner relied upon serial No. 3 of Circular 171/03/2022-GST dated 06.07.2022 contending that where both inward and outward invoices are unsupported by supplies, recovery under Sections 73 or 74 is not required though penal action under Section 122 may follow. Adjudication Order declined to apply Circular on ground that it was issued after SCN - Whether Circular 171/03/2022-GST precludes recovery under Section 74 - HELD - The Circular distinguishes between two situations. Where person avails ITC on invoice unsupported by inward supply but uses that credit for tax on genuine outward supply, serial No. 2 contemplates recovery under Section 74. Where both inward and outward invoices are unsupported by supplies, serial No. 3 states that recovery under Sections 73 or 74 is not required though penal action under Section 122 may follow. The Circular also recognises that actual case may involve mixture of these situations - Whether situation under Circular applies and what consequence follows for demand and penalties depend upon character of inward and outward transactions. These matters fall squarely within scope of appellate examination under Section 107(11) of CGST Act which empowers Appellate Authority after making such further inquiry as may be necessary to confirm, modify or annul decision under appeal. Mere invocation of Circular does not render SCN or adjudication without jurisdiction - All grounds concerning demands, interest and penalties are left open for consideration in appeal.
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