Katyani Exports Vs Union of India and Ors (Delhi High Court)
Summary: The Delhi High Court considered a batch of eight writ petitions filed by five exporters and three suppliers challenging Show Cause Notices dated 29.07.2022 and 26.02.2024 and the consequential Order-in-Original dated 05.02.2025 arising from proceedings under the Central Goods and Services Act, 2017 and the Integrated Goods and Services Act, 2017. The petitions also challenged Circular No.31/05/2018-GST dated 09.02.2018, as amended by Circular No.169/01/2022-GST dated 12.03.2022 and Circular No.239/33/2024-GST dated 04.12.2024, insofar as the amended framework provided for selection of a Common Adjudicating Authority for composite DGGI notices involving multiple noticees across Commissionerates.
According to the investigation, the matter concerned an alleged fraudulent IGST arrangement involving a three-layer chain of fictitious invoicing, with L-2 suppliers issuing goods-less invoices to L-1 suppliers and those entities passing fraudulent credit to exporter/end-user firms. The impugned Show Cause Notice was issued under Section 74(1) to 146 noticees, while the Order-in-Original confirmed ITC, interest and penalties against different categories of noticees and individuals. The petitioners bypassed the statutory appeal and invoked writ jurisdiction.
The petitioners argued that the impugned circulars could not assign jurisdiction, that they did not identify their statutory source or Board approval under Section 168(2), and that Notification No.02/2022-Central Tax merely created a class of competent officers without assigning jurisdiction to a particular assessee. They also challenged the highest-demand criterion under Article 14, relied on the statutory scheme concerning Sections 3, 5(3), 166, 167 and 168, questioned the appellate arrangement for Haryana-based petitioners, and relied on authorities including Commissioner of Central Excise, Bolpur v. Ratan Melting & Wire Industries, BMG Informatics Pvt. Ltd. v. Union of India, Union of India v. Bharat Forge Ltd., Ishar Alloy Steels Ltd. v. Jayaswals Neco Ltd., Shree Gouri Shankar Jute Mills Ltd. v. Union of India and Anirudhsinhji Karansinhji Jadeja v. State of Gujarat.
