Rahul Solanki, Director Srivenkateshwar Tradex Pvt. Ltd. vs. Commissioner, Central Tax Delhi West & Ors. and connected matters
Background
The petitioner, a company director, was issued a show-cause notice in July 2020 personally proposing a penalty against him under GST law for the period 2017-19, on the basis that he was involved in transactions leading to fraudulent Input Tax Credit claims. He argued the relevant penalty provision (Section 122(1) of the CGST Act) applies only to a registered "taxable person," not to an individual director acting in his personal capacity, and that the notice improperly combined two separate financial years into one proceeding.
Decision Breakdown
This petition was one of roughly 20 connected GST cases decided together in a single judgment. Rather than resolving the core legal question of whether a non-taxable individual can be penalised under Section 122(1), the Court noted that question was already pending before the Supreme Court in another case and left it open. It held the objection over which tax officer had authority to issue the notice was not a clear-cut jurisdictional defect justifying a bypass of the normal appeal process, and directed all the petitioners in the batch, including this one, to pursue their statutory appeal instead of the writ petition, while confirming, based on an earlier Delhi High Court ruling, that they would not have to pay the newer, higher pre-deposit amount introduced from October 2025, since their proceedings began before that change.
Lesson Learnt
When a legal question of general importance is already pending before the Supreme Court and a full statutory appeal process exists, the High Court will generally direct a taxpayer to use that appeal route rather than decide the technical question itself in a writ petition, though taxpayers retain the benefit of the older, more lenient pre-deposit rules if their case began before those rules changed.