Prathiba M. Singh, J. (Oral)

1. This hearing has been done through hybrid mode.

2. The present petition has been filed by the Petitioner- Mr. Mukesh Kumar Garg under Article 226 and 227 of the Constitution of India, inter alia, assailing the Order-in-Original bearing no. 220/CGST/ADC(SKJ)/2024-2025 dated 30th January, 2025 (hereinafter ‘impugned order’) passed by the Respondent No. 3- Additional Commissioner-Adjudication Central Goods And Services Tax, Delhi West Commissionerate. The said impugned order arises out of Show Cause Notice (hereinafter, ‘SCN’) dated 31st July, 2024, which was issued to several companies.

3. In brief, the case of the Department is that two individuals namely Mr. Anuj Garg and his father Mr. Mukesh Kumar Garg i.e. the Petitioner had incorporated or established 28 firms. Thereafter, in collusion with various other traders the Petitioner had availed of fake Input Tax Credit (hereinafter, ‘ITC’) without any supply of goods or services.

4. As stated in the SCN, the Department conducted a detailed investigation against the said firms and their promoters/directors. Various documents were analysed. Statements of several persons, who were associated with these two individuals, were also recorded.

5. According to the Department, the total ITC, which was availed of by the entity, which was controlled by Mr. Anuj Garg, who is the son of Mr. Mukesh Kumar Garg is to the tune of Rs.1,15,73,68,714/- (More than Rs. 115 crores). A detailed order has been passed by the Respondent No.3 after issuance of the SCN. The Petitioner had also filed a reply to the said SCN. Personal hearing was also granted to the Petitioner. In the impugned order, penalties have been imposed on the Petitioner by the Respondent No. 3.

6. The Petitioner i.e. Mr. Mukesh Kumar Garg, assails the impugned order on various grounds. The first ground being that under Section 74 read with Section 122(1) of the Central Goods and Service Tax Act, 2017 (hereinafter ‘CGST Act’), the Petitioner is not a taxable person and hence, no penalty could have been imposed on him. Secondly, it is submitted on behalf of the Petitioner that at best under Section 122(3) of the CGST Act, the penalty which could have been imposed on the Petitioner was to the extent of Rs.25,000/-.

7. Mr. Maggu, ld. Counsel appearing for the Petitioner argues that the Petitioner was not the authorized signatory of the main firm, which had availed the ITC and the same was run by his son i.e. Mr. Anuj Garg. Ld. Counsel for the Petitioner submits that under such circumstances, the penalty which has been imposed against the Petitioner deserves to be quashed.

8. On behalf of the Respondent Nos. 2 and 3, Ms. Benjamin, ld. Sr. Standing Counsel submits that all the tax returns are filed by authorized signatories, who are usually directors or promoters of the company. In the case of the Petitioner, one of the firms, which was set up to enable the fraudulent availment of ITC, was M/s Bhagwati Trading Company, which is the sole proprietary concern of the Petitioner. Insofar as the said firm was concerned, the same was coming within the jurisdiction of another Commissionerate and hence, the SCN was not issued M/s Bhagwati Trading Company. However, the facts which are set out in the impugned order clearly show the relationship between M/s Bhagwati Trading Company and two individuals, who are the master minds. It is further submitted by the ld. Sr. Standing Counsel that in addition to the two said persons i.e. the Petitioner and Mr. Anuj Garg, two other persons, who were their associates, were also involved in setting up the fake firms as to enable the fraudulent availment of ITC. Ld. Sr. Standing Counsel submits that the question of imposition of penalty can also be challenged in an appeal by the Petitioner under Section 107 of the CGST Act and this is not a case where the Court ought to entertain the writ petition. It also stated that all the staff of the son of the Petitioner have admitted the irre