Order Date - 29 July 2025 
Parties: Ambika Traders Vs Additional Commissioner, Adjudication, DGGSTI, CGST Delhi North

Facts -

• The Petitioner, Ambika Traders, was issued a Show Cause Notice alleging fraudulent availment and passing of ITC based on invoices from 20 fake/non-existent firms. Proprietor Mr. Gaurav Gupta was arrested and later released on bail.
• Despite filing replies and seeking cross-examination, which was denied, the Adjudicating Authority confirmed the entire tax demand with an equivalent penalty on the firm and an additional penalty on the proprietor.

Issue -

• Whether the impugned adjudication order violated principles of natural justice based on Non-consideration of reply and denial of cross-examination?

Order -

• The Division Bench of the Hon’ble High Court observed that the reply does not prima facie contest the investigation and the facts revealed therein. 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 the additional reply giving such details. Thus, the conclusion of the Adjudicating Authority cannot be held to be arbitrary or perverse.
• A solitary availment or utilization of ITC in one financial year may actually not be capable of by itself establishing the pattern of fraudulent availment or utilization. It is only when the series of transactions are analysed, investigated, and enquired into, and a consistent pattern is established, that the fraudulent availment and utilization of ITC may be revealed. The language in the abovementioned provisions i.e., the word `period’ or `periods’ as against `financial year’ or `assessment year’ are therefore, significant.
• In the facts of this case, no prejudice is caused to the Petitioner if cross-examination is not afforded as all the documents relied upon by the Adjudicating Authority are those which have been recovered from the Petitioner’s premises itself and the Petitioner is well in the knowledge of the actual status of the purchasers and the suppliers.
• The limitation for availing of the appellate remedy, however, has expired in terms of Section 107 of the CGST Act. Since the petition has remained pending before this Court since April 2025, the Petitioner is given time till 31st August, 2025 to file an appeal challenging the impugned order dated 23rd January 2025 along with the requisite pre-deposit.