Delhi High Court Protects Against Duplicate GST Demands - Section 6(2)(b) Relief Granted

The Hon'ble High Court of Delhi in M/s Shanti Swaroop Nikhil Kumar v. Additional Commissioner CGST, North, W.P.(C) 5337/2025, decided on April 25, 2025, held that where a petitioner had already received a show cause notice from Delhi GST for the same period and entity, subjecting the petitioner to demand for the same amount twice over would be violative of Section 6(2)(b) of the Central Goods and Service Tax Act, 2017. The Court observed that the issue was of duplication and permitted the petitioner to file an appeal with pre-deposit only in respect of the amount relating to one entity (Keshav International) and not for the duplicated entity (Pancham Trading Co.). The Court directed that the appellate authority shall adjudicate the appeal on merits without rejecting it for want of pre-deposit or on limitation grounds regarding the duplicated demand.

Facts of the Case

The Petitioner, M/s Shanti Swaroop Nikhil Kumar, filed a petition under Articles 226 and 227 of the Constitution of India assailing the impugned order dated January 27, 2025 issued by Respondent Additional Commissioner CGST, North. The impugned order had been passed against the Petitioner raising a demand of Rs. 16,91,800. The allegations against the Petitioner were in respect of availment of fraudulent Input Tax Credit qua six firms, who were noticee Nos. 1 to 6 in the show cause notice dated July 11, 2024.

The six firms involved were: (1) Keshav International, (2) Shiv Kripa International, (3) Panchwati Enterprises, (4) Laxmi Enterprises, (5) Shivaay International, and (6) Pancham Trading Co. Each firm had different penalty amounts imposed under various sections of the CGST Act. The submissions on behalf of the Petitioner were that insofar as Pancham Trading Co. was concerned, the Petitioner already had received a show cause notice from the Delhi GST for the same very period i.e., July 2017 to March 2018 and the Petitioner could not be subjected to a demand qua the same amount twice over.

Mr. Joshi, learned Senior Standing Counsel for the Respondent submitted that the demand against the Petitioner was under Section 74 of the CGST Act. The show cause notice dated July 11, 2024 was in respect of two entities i.e., Keshav International and Pancham Trading Co. The Respondent argued that even if the demand raised against one entity had been adjudicated by the Delhi Goods and Service Tax Department, in respect of the other entity, the Petitioner ought to proceed in appeal against the impugned order. The order dated December 14, 2023 passed by the State GST was placed on record, which showed that it was for the same period i.e., July 2017 to March 2018 and a demand of Rs. 22,03,320 had been raised.

The Petitioner was aggrieved by the duplication of proceedings and demands for the same period and same entity.

Issue

Whether a petitioner who had already received a show cause notice from Delhi GST for the same period and entity could be subjected to a demand for the same amount twice over, and if not, what relief should be granted.

Held by the Court

The Hon'ble High Court of Delhi in M/s Shanti Swaroop Nikhil Kumar v. Additional Commissioner CGST, North, W.P.(C) 5337/2025, decided on April 25, 2025, held that:

The Court observed that since the issue was of duplication, the Petitioner was permitted to file an appeal against the impugned order dated January 27, 2025 and the pre-deposit would be made only in respect of the amount relating to Keshav International. The Court recognized that subjecting the petitioner to demand for the same amount twice over in respect of Pancham Trading Co. would be violative of Section 6(2)(b) of the Central Goods and Service Tax Act, 2017.

The Court held that the Petitioner was permitted to approach the Appellate Authority under Section 107 of the CGST Act within thirty days and would make a pre-deposit of 10% qua the amount demanded against Keshav International only and not for Pancham Trading Co. The Court provided significant protection by ruling that if the said pre-deposit was made by the Petitioner, the appeal shall be entertained on merits and shall not be rejected for want of pre-deposit qua Pancham Trading Co. or on the issue of limitation.

The Court directed that the Appellate Authority shall adjudicate the appeal on merits, thereby ensuring that the substantive issues would be properly examined without the petitioner being penalized for the administrative duplication of proceedings. The Court thus protected the petitioner from the unfair burden of double jeopardy while ensuring that legitimate demands could still be pursued through proper appellate channels.

Relevant Sections

• Section 6(2)(b) of Central Goods and Services Tax Act, 2017

• Section 74 of Central Goods and Services Tax Act, 2017

• Section 107 of Central Goods and Services Tax Act, 2017

• Articles 226 and 227 of Constitution of India

______________________________________________________________

DISCLAIMER: The views expressed are strictly of the author and NLF Tax and Legal Advisory. The contents of this article are solely for informational purposes and for the reader’s personal non-commercial use. It does not constitute professional advice or a recommendation of the firm. Neither the author nor the firm and its affiliates accept any liabilities for any loss or damage of any kind arising out of any information in this article nor for any actions taken in reliance thereon. Further, no portion of our article or newsletter should be used for any purpose(s) unless authorized in writing, and we reserve the legal right for any infringement on usage of our article or newsletter without prior permission