Arun Kumar Jain Vs Additional Commissioner CGST Delhi West Commissionerate & Ors. (Delhi High Court)
Summary: The Delhi High Court disposed of twelve connected writ petitions challenging a common Order-in-Original dated 06.02.2025 imposing penalties under Sections 74, 76(2) and 122(1) of the CGST Act on Managing Directors and Directors of companies allegedly involved in fraudulent availment and utilisation of Input Tax Credit. No tax demand had been raised against the Petitioners in their individual capacities. Their principal contention was that Section 122(1) applies only to a “taxable person” and could therefore not be invoked against them personally. The Court declined to decide that issue because the same question is pending before the Supreme Court in Mukesh Kumar Garg v. Union of India & Ors., SLP(C) No.18178/2025. Since an appeal under Section 107 was admittedly maintainable and the other grounds required examination of individual roles, allegations and evidence, the Petitioners were relegated to the statutory appellate remedy. Following Gaurav Jain & Anr. v. Joint Commissioner (Appeals-II), CGST Delhi Zone & Anr., the Court held that the pre-deposit requirement would be governed by Section 107(6) as it stood when the SCNs were issued in 2020, and not by the substituted proviso effective from 01.10.2025. Physical appeals were also directed to be accepted where portal filing was not possible.
Section 122(1) Issue Left Open Pending Supreme Court Decision
The Petitioners challenged penalties imposed personally upon them even though the SCNs did not propose any tax demand against them in their individual capacities. Their main argument was that Section 122(1) of the CGST Act applies only to a “taxable person”.
