The Supreme Court has stayed the goods and service tax (GST) recovery in fake Input Tax Credit (ITC) cases subject to 25% pre-deposit by non-taxable persons.
The bench of Justice Pankaj Mithal and Justice Prasanna B. Varale stated, “there shall be stay on the recovery of the amount directed to be deposited provided the appellant deposits 25% of the demand before the GST Department either through Electronic Ledger or through Cash Ledger.
The Special Leave Petition was filed by the assessee against the order of the Delhi High Court. The Delhi High Court dismissed the petition with costs of Rs.50,000/- to be deposited with the Delhi High Court Bar Association.
The Delhi High Court noted that the Petitioner and his other family members are alleged to have incorporated or floated various firms and businesses only for the purposes of availing ITC without there being any supply of goods or services. The order in question dated 30th January, 2025, which is under challenge, is a detailed order which consists of various facts as per the Department, which resulted in the imposition of demands and penalties. The demands and penalties have been imposed on a large number of firms and individuals, who were connected in the entire maze and not just the Petitioner.
The High Court held that order is an appealable order under Section 107 of the CGST Act. One of the co-noticees, who is also the son of the Petitioner i.e. Mr. Anuj Garg, has already appealed before the Appellate Authority. Insofar as exercise of writ jurisdiction itself is concerned, it is the settled position that this jurisdiction ought not be exercised by the Court to support the unscrupulous litigants.
Therefore aggrieved by the order of the Delhi High Court, the petitioner approached Supreme Court on two grounds.
First, Section 122(1) of the Central Goods and Services Tax Act, 2017 would not be applicable to the petitioner as he is a non-taxable person.
Secondly, the provisions of Section 122 (1A) of the Act which came into force w.e.f. 01.01.2021 cannot be applied retrospectively for the Assessment Years 2017-2020.
The Apex court while granting the leave to the petition stayed the recovery on 75% Amount Subject to 25% Pre-Deposit.
Case Details
Case Title: Mukesh Kumar Garg Versus Union Of India & Ors.
Case No.: SLP NO(S). 18178/2025
Date: 04-08-2025
Counsel For Petitioner: J. Sai Deepak, Sr. Adv.
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