Knight Fly Boyz Vs Office of Deputy Commissioner of State Tax (SGST) (Punjab and Haryana High Court)
The Punjab and Haryana High Court dismissed a writ petition challenging multiple GST demand orders passed under Section 73 of the Central Goods and Services Tax Act, 2017, holding that the acts of a Chartered Accountant engaged by the taxpayer bind the taxpayer under the principal–agent relationship. The petitioner, a partnership firm engaged in manpower supply services, alleged that its Chartered Accountant misappropriated substantial funds entrusted to him for payment of GST liabilities and manipulated GST filings by adjusting fake input tax credits. Demand orders for the financial years 2017–18, 2018–19 and 2019–20 were issued by the tax authorities for non-payment of tax and irregularities in input tax credit.
The petitioner contended that the impugned orders violated principles of natural justice, asserting that it had no knowledge of the notices or proceedings as the Chartered Accountant failed to inform it and did not respond on its behalf. It was further argued that the petitioner never intended to default, having transferred the requisite amounts to the Chartered Accountant for onward payment to the Government. The petitioner also challenged the rejection of its rectification application, claiming that the authorities mechanically ignored the fraud committed by the Chartered Accountant.
