Penalty Can Be Levied on Any Person Under Section 122(1A) of CGST Act
By Author / July 10, 2025
GST Judgements | Delhi High Court
Case Overview
In Bhupender Kumar v. Additional Commissioner Adjudication CGST Delhi North & Ors [W.P.(C) 9141/2025 & CM APPL. 38815/2025], the Delhi High Court, on July 07, 2025, examined a writ petition challenging a penalty order dated February 1, 2025. The Central GST Delhi North Commissionerate had imposed a penalty of approximately ₹285 crore under Section 122(1A) of the CGST Act, 2017, along with additional penalties under Sections 122(3)(a), (d), (e) and Section 125.
Background of the Case
Bhupender Kumar, a GST consultant, was allegedly involved in a massive fake Input Tax Credit (ITC) fraud. Authorities linked him to 63 fake firms, with 54 firms reportedly used to claim fraudulent ITC. The Directorate General of GST Intelligence (DGGI) issued a show cause notice (SCN) on March 8, 2024.
The notice alleged that Kumar, along with others—including the alleged mastermind Sanjay Sehgal—created these fake entities and facilitated bogus ITC claims.
Court’s Key Findings
The Delhi High Court noted the following:
- Kumar admitted to helping register bogus firms using fraudulent documents.
- He was fully aware of the fake nature of the firms and their fraudulent activities.
- He did not respond to the SCN, which accused him of earning commission from the fake ITC transactions.
- The misuse of ITC provisions had a severe impact on the integrity of the GST system.
- The court found that writ jurisdiction was not suitable for deciding this case, which involved complex factual issues.
Legal Position & Section 122(1A)
The Court emphasized that Section 122(1A) of the CGST Act can apply retrospectively from the date of the show cause notice. Therefore, the court held that Bhupender Kumar was liable under this section for his role in facilitating fraudulent transactions.
Opportunity for Appeal
Though the limitation period had expired, the Court permitted Kumar to file an appeal under Section 107 of the CGST Act. The appeal, if filed within a month, would be heard on its merits, the Court clarified.
Conclusion
The Delhi High Court declined to quash the penalty order and upheld the findings against Kumar. It stressed the seriousness of the fraud, the misuse of ITC facilities, and the importance of protecting the GST system from such abuse.
At the same time, it allowed Kumar to pursue an appellate remedy, offering him a final opportunity to challenge the order through proper legal channels.
