Prathiba M. Singh, J. (Oral)

1. This hearing has been done through hybrid mode.

CM APPL. 38816/2025 (for exemption)

2. Allowed, subject to all just exceptions. Application is disposed of.

W.P.(C) 9141/2025 & CM APPL. 38815/2025

3. The present petition challenges the impugned order dated 1st February, 2025 passed by the Central GST, Delhi North, raising a demand of a sum of approximately Rs. 285 crores against the Petitioner– Mr. Bhupender Kumar. The operative portion of the impugned order reads as under:

iv. I impose a penalty upon Shri Bhupinder Kumar, equivalent to the ITC availed, collectively amounting to Rs.2,85,66,26,459/- under Section 122(1A) of the CGST Act, 2017 read with concurrent provisions of SGST Act, 2017 and further read with Section 20 of the IGST Act, 2017 and Order to recover the same from him;

v. I also impose a penalty of Rs.75000/- upon Shri Bhupinder Kumar, under Section 122(3) (a), (d) & (e) of the CGST Act, 2017 read with concurrent provisions of SGST Act, 2017 and further read with Section 20 of the IGST Act, 2017 and, Order to recover the same from him;

vi. I also impose a penalty of Rs.75000/- upon Shri Bhupinder Kumar, under Section 125 of the CGST Act, 2017 read with concurrent provisions of SGST Act, 2017 and further read with Section 20 of the IGST Act, 2017 and, Order to recover the same from him;

4. The brief background of the case is that the Petitioner is a GST consultant against whom a show cause notice was issued on 8th March, 2024 (hereinafter, ‘the SCN’) by the Directorate General of Goods and Service Tax Intelligence, Ghaziabad Regional Unit (hereinafter, ‘DGGI’) along with three other individuals namely Sh. Naveen Monga, Sh. Anoop Kumar and Sh. Sanjay Sehgal.

5. The allegations in the SCN were that 44 fake firms were created and operated by Sh. Sanjay Sehgal and his associates. The Petitioner was one of the consultants engaged by Sh. Sanjay Sehgal who enabled the creation of the said firms. Initially the investigation was started on the ground that there were 44 fake firms but thereafter, when investigation was conducted, it was realized that there were 63 fake firms, out of which 54 firms were used for fraudulent availment and passing on of input tax credit (hereinafter, ‘ITC’).

6. The searches were conducted at four premises, including the office of Sh. Naveen Monga, residential address of the Petitioner, godown of the Petitioner and the residential address of the Sh. Anoop Kumar. Statements were also recorded of all these persons and on the basis of the documents, etc. which were collected by the DGGI, the SCN was issued.

7. The submission on behalf of the Petitioner is that in so far as the Petitioner is concerned, the only notice to show cause was issued under Section 122(3)(a), (d) & (e) of the Central Goods and Service Tax Act, 2017 (hereinafter, ‘CGST Act’). The Petitioner’s statement was also recorded prior to the issuance of the SCN. It is not in dispute that the Petitioner did not reply to the said SCN.

8. Ld. counsel for the Petitioner raises the following two grounds in the present petition:

i. That no notice was issued under Section 122(1A) of the CGST Act and hence, no penalty could have been imposed under said provision till the twin conditions under Section 122(1A) of the CGST Act are not satisfied.

ii. That the Petitioner was merely a consultant and the mastermind of the alleged transactions was admittedly Sh. Sanjay Sehgal even as per the DGGI. Sh. Sanjay Sehgal has also admitted to this position in his statement.

9. Ld. Counsel also relies upon the decision of the Allahabad High Court in WRIT TAX NO. 777 of 2022 titled M/s Samsung India Electronics Private Limited v. State of U.P. & Ors. to argue that if the show cause notice does not contain a specific allegation, the final order cannot be passed on a ground not contained in the show cause notice. Reliance is also placed upon Section 75(7) of the CGST Act to reaffirm the said submission.

10. Mr. Garg submits that