Prima facie duplication of GST demand
for same transaction warrants reduced pre-deposit: Delhi HC allows consolidated
appellate remedy
M/s Kunj Behari Enterprises Vs. Commissioner of CGST,
Delhi North
W.P.(C) 4776/2025 | Order Dated: 16 April 2025 | High
Court of Delhi
Summary of the Case
The Delhi High Court on 16 April 2025 dealt
with a complex case involving allegations of fraudulent Input Tax Credit
(ITC) claimed by the petitioner, Vipin Kumar Mittal, proprietor of M/s
Kunj Behari Enterprises. The GST authorities had issued two separate
adjudication orders, both of which allegedly raised duplicated demands
relating to the same transaction with a supplier — M/s Nivaran Enterprises.
The petitioner sought clubbing of the proceedings and
interim relief against demand orders totaling over ₹69 lakhs, claiming
that ₹55,15,012 had been erroneously demanded twice — once in each
order. While the Court refrained from interfering with the substance of the
orders, it allowed the petitioner to file an appeal, waiving part of the
pre-deposit requirement due to the apparent duplication.
Background and Facts
1.
DGGI
Investigation: The Directorate
General of GST Intelligence (DGGI) investigated a fraudulent ITC racket
allegedly operated by M/s Skylark Infra Engineering Pvt. Ltd., involving
fake invoices of over ₹5.89 crores.
2.
Role of Fake
Firms: Skylark Infra allegedly
received bogus invoices from six non-existent firms, including M/s
Nivaran Enterprises.
3.
Petitioner as
Co-Noticee: One of these fake entities —
M/s Nivaran Enterprises — was found to have further passed on
ineligible ITC to 47 firms, including M/s Kunj Behari Enterprises,
the petitioner’s proprietorship.
4.
Two Orders
Passed Against Petitioner
o
Order No.
63/ADC/2024-25 dated 21 January 2025:
Confirmed demand of ₹55,15,012 and equivalent penalty against the
petitioner, based on linkage with M/s Skylark Infra via M/s Nivaran
Enterprises.
o
Order No.
55/2024-25 dated 10 January 2025:
Based on SCN Ref. No. 325/2024-25, confirmed:
§
₹55,15,011 for ITC
from M/s Nivaran Enterprises, and
§
₹14,12,730 for ITC
from another fake entity, M/s Radhey Enterprises.
5.
Alleged
Duplication of Demand: The petitioner
pointed out that the amount of ₹55,15,012 appeared in both orders,
indicating a duplication of liability, thereby inflating the actual tax
demand.
Petitioner’s Submissions
Advocates for the petitioner submitted:
- The same ITC amount related to M/s Nivaran Enterprises was
included in both orders, constituting a double demand.
- The department had erroneously proceeded against the
petitioner on two separate fronts for the same transaction.
- Such duplication, if allowed to stand, would lead to double
jeopardy, violating the principles of natural justice and fair
adjudication.
- The financial burden of full pre-deposit under Section 107
CGST Act for both orders was unjust, particularly when one demand
was duplicative.
Respondent’s Submissions
Appearing on behalf of the GST department, the Senior
Standing Counsel:
- Defended both orders as legally valid, arising from distinct
investigations.
- Asserted that the petitioner had not replied effectively to the show
cause notices, justifying the confirmed demands.
- Did not clearly refute the allegation of duplication in
respect of the ₹55.15 lakh figure.
Legal Issues Before the Court
1.
Whether the same
ITC amount was wrongly demanded twice under two different
adjudication orders?
2.
Whether the
petitioner could be granted the liberty to pursue statutory appellate
remedies, considering the duplication?
3.
Whether the Court
could exercise jurisdiction under Article 226 to moderate the pre-deposit
condition in light of apparent duplication?
Court’s Analysis and Findings
1. Prima Facie Duplication Admitted
- The Bench noted that the petitioner had been served two separate
orders, each mentioning an identical tax demand of
approximately ₹55.15 lakh from M/s Nivaran Enterprises.
- The amounts in both orders matched exactly, except for a
difference of Re. 1, which appeared to be clerical.
“On a prima facie perusal, it appears that the amount
pertaining to M/s Nivaran Enterprises has been reflected in both orders…”
This led the Court to suspect duplication,
warranting further examination by the Appellate Authority.
2. Appellate Remedy to Be Invoked
- The Court held that both orders were appealable under Section
107 of the CGST Act.
- The appropriate authority would need to determine whether the
demands were justified and non-overlapping.
“The question of duplication, if any, shall be
examined and adjudicated by the Appellate Authority.”
3. Relief on Pre-Deposit
- Given the possibility of duplication, the Court granted partial
waiver of pre-deposit:
- The petitioner would be required to make a pre-deposit only for
the ₹14,12,730 pertaining to M/s Radhey Enterprises, mentioned
in the second order (10 January 2025).
- No additional deposit would be insisted upon for the duplicated
₹55.15 lakh component until the issue was adjudicated.
Final Orders by the Court
1.
Liberty
Granted: The petitioner was permitted
to file appeals against both adjudication orders before the appellate
authority.
2.
Reduced
Pre-deposit: The petitioner
would be required to pre-deposit only ₹14,12,730 initially, pertaining
to M/s Radhey Enterprises.
3.
30-Day
Timeline for Appeal
The petitioner was directed to file the appeals within 30 days from the
date of order.
4.
Adjudication
on Merits: The Appellate Authority was
directed to examine the duplication issue and decide the appeals on
merits, in accordance with law.
5.
No
Examination of Merits by HC: The High
Court clarified that it had not entered into the merits of either order, except
to the extent of directing pre-deposit and highlighting prima facie
duplication.
6.
Petition
Disposed: The writ petition was
disposed of in the above terms, and all pending applications were closed.
Conclusion
The Delhi High Court’s decision in Vipin Kumar
Mittal v. Commissioner of CGST, Delhi North provides vital procedural
relief in a case of alleged duplicate GST demand. It reflects the
court’s balanced approach — emphasizing judicial restraint, deference
to statutory remedies, and intervention only to the extent of ensuring
fairness.
Disclaimer: All the Information is based on the notification, circular and order issued by the Govt. authority and judgement delivered by the court or the authority information is strictly for educational purposes and on the basis of our best understanding of laws & not binding on anyone.
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