M/S TECHNOSYS INTEGRATED SOLUTIONS PVT LTD v. UNION OF INDIA

Judgment

#1. UNION OF INDIA Through its Secretary, Department of Revenue, Ministry of Finance, Government of India, North Block, New Delhi -110001 .....RESPONDENT NO. 1

#2. CGSTR NORTH COMMISSIONERATE, Additional Commissioner, CGST Delhi North Commissionerate, C.R. Building, I.P. Estate, New Delhi – 110002 .....RESPONDENT NO. 2 Signature Not Verified Signed By:ANKITA RAI Signing Date:17.03.2026 14:48:08 W.P.(C) 5581/2025

#3. OFFICE OF THE COMMISSIONER CGST, AUDIT-I Through Commissioner, CGST Audit-I, CR Building, IP Estate, New Delhi .....RESPONDENT NO. 3

Through: Ms. Anushree Narain, Mr. Yamit Jetley and Mr. Naman Choula, Advocates for R-2 and R-3 CORAM: HON’BLE MR. JUSTICE NITIN WASUDEO SAMBRE HON’BLE MR. JUSTICE AJAY DIGPAUL JUDGMENT AJAY DIGPAUL, J.

#1. The petitioner, M/s Technosys Integrated Solutions Pvt. Ltd., is a private limited company registered under the Goods and Services Tax1 laws and is stated to be engaged in the supply/installation of CCTV surveillance systems. 2. The petitioner was subjected to GST audit for the period from FY 2017-18 to FY 2021-22. An intimation in Form ADT-01 dated

20.03.2023 was issued by the Audit Wing of Central Goods and Services Tax2 in that regard. 3. Pursuant thereto, an Observation Memo dated 06.11.2023 came to be issued upon scrutiny/verification of the petitioner‟s records during 1 Hereinafter “GST” 2 Hereinafter “CGST” Signature Not Verified Signed By:ANKITA RAI Signing Date:17.03.2026 14:48:08 W.P.(C) 5581/2025 audit, and the said Observation Memo indicated a GST liability of ₹49,52,923/-. 4. On 07.11.2023, as per the petitioner, the said amount of ₹49,52,923/- through DRC-03, which was made during audit, was paid without contest. 5. Thereafter, on 16.11.2023, an email was issued from the office of respondent no. 3 calling for copies of contracts. Subsequently, Audit Report No. 728/2023-24 dated 23.01.2024 was issued. The petitioner filed a reply dated 05.02.2024 to the Audit Report. 6. In the meantime, Form DRC-01A dated 31.01.2024, bearing Reference No. 464, was issued to the petitioner with reference to Audit Para VII, and according to the petitioner‟s own Show Cause Notice3 reply, audit paras I to VI stood settled and the dispute thereafter proceeded in respect of audit para VII. A reply to the said DRC-01A was also filed by the petitioner. 7. Thereafter, SCN No. 09/2024-25 along with SCN in Form DRC- 01 dated 09.04.2024, later followed by a corrigendum dated 13.11.2024, was issued to the petitioner. As noticed in the SCN, it was proposed that: firstly, a GST demand of ₹18,67,69,338/- on the allegation that the petitioner had wrongly availed the benefit of Notification No. 11/2017- CT (Rate) dated 28.06.2017 by treating its supplies as works contract services taxable at 12% for the period FY 2017-18 to FY 2021-22; secondly, a further GST demand of ₹1,30,00,000/- on account of alleged 3 Hereinafter “SCN” Signature Not Verified Signed By:ANKITA RAI Signing Date:17.03.2026 14:48:08 W.P.(C) 5581/2025 non-payment of GST at 28%; and lastly, penalties under Section 74 and Section 122(1)(xvii) of the Central Goods and Services Tax Act, 20174. 8. The petitioner submitted a detailed reply to the said SCN on

09.05.2024 before the adjudicating authority. 9. In its reply dated 09.05.2024, the petitioner stated, inter alia, that it was engaged in providing works contract services relating to the installation of security cameras and CCTV systems. It submitted that the audit had earlier culminated in the Observation Memo dated 06.11.2023 and that it had already responded to both the Audit Report and DRC-01A and they denied any suppression or wilful misstatement. It further contended that it was entitled to the concessional rate of 12% under Sl. No. 3(vi) of Notification No. 11/2017-CT (Rate) dated 28.06.2017 on the basis that its supplies constituted works contract services rendered to government agencies. The petitioner also asserted in the said reply that CCTV installations qualified as works contract within the meaning of Section 2(119) of the CGST Act. 10. A personal hearing was thereafter held before the adjudicating authority. 11. Thereafter, Order-in-Original5 No. DE/GST/ADC (JR) 224/2024- 25 dated 31.01.2025 came to be passed with reference to SCN No. 09/2024-25 dated 10.04.2024 and corrigendum dated 13.11.2024. The said OIO dated 31.01.2025 confirmed the entire demand proposed in the 4 Hereinafter “CGST Act” 5 Hereinafter “OIO” Signature Not Verified Signed By:ANKITA RAI Signing Date:17.03.2026 14:48:08 W.P.(C) 5581/2025 SCN, namely: GST of ₹18,67,69,338/- on the issue relating to alleged wrongful availment of the 12% rate under Notification No. 11/2017-CT (Rate); GST of ₹1,30,00,000/- on the allegation of non-payment of GST at 28%; and penalty under Section 74 as well as Section 122(1)(xvii) of the CGST Act, resulting in a total penalty of 200%. 12. After the passing of the said OIO, multiple Form GST DRC-07 summaries came to be issued with reference to the order dated

31.01.2025. For FY 2017-18, DRC-07 summaries were issued on

03.02.2025, 04.02.2025 and 05.02.2025. 13. It is in these circumstances that the present writ petition came to be filed before this Court, wherein the petitioner has sought quashing of the impugned OIO dated 31.01.2025 and dispensation of the requirement of pre-deposit on the ground that an amount of ₹49,52,923/- had already been paid on 07.11.2023 during the course of audit as part of admitted liability. 14. When the present matter was taken up on 30.04.2025 for the first time, this Court crystallised the grounds raised in the petition and identified the specific issue that arose for consideration in the matter. Inasmuch as the said order narrows the scope of adjudication, the relevant paras thereof are reproduced below for the sake of clarity: “4. The broad grounds raised by Mr. Abhishek A Rastogi, ld. Counsel for the Petitioner are as under: (i) In the Audit Observation Memo dated 6th November 2023, the differentiation of contract of works service taxed at 12%and the second category of service tax for supply of goods at 18% was not raised in the Observation Memo. Signature Not Verified Signed By:ANKITA RAI Signing Date:17.03.2026 14:48:08 W.P.(C) 5581/2025 (ii) Moreover, multiple years have been clubbed in the Show Cause Notice and common demands have been raised. (iii) That penalty has been imposed under Section 75(3) of the Central Goods and Service Tax Act, 2017 (hereinafter, „CGST Act‟) despite the penalty under Section 74 of the CGST Act having already been imposed.

#5. Heard. There are matters before this Court in which the question of multiple years being clubbed in the Show Cause Notice has been considered by this Court and the same is part-heard. The said matters are listed on 20th May, 2025.

#6. In so far as the categorisation of the goods and services is concerned, that would be an issue which would have to be raised in an appeal. However, insofar as consolidation of multiple years is concerned, since the issue is part heard, the Court adjourns the matter to 20th May, 2025.”

#15. Although the order dated 30.04.2025 crystallises the controversy which arises for consideration, it would also be apposite to briefly mention the major grounds urged, as further elaborated in the written submissions dated 09.02.2026. Broadly, the petitioner challenges the impugned proceedings on the ground that the SCN and the OIO impermissibly consolidate multiple financial years into a single adjudicatory exercise, even though, according to the petitioner, the present matter does not concern fraudulent availment or utilisation of Input Tax Credit6, but arises out of an interpretational dispute as to the nature of the supplies effected by it and the rate of tax applicable thereto. The petitioner‟s case is that each financial year ought to have been dealt with separately and that the passing of a common order has resulted in 6 Hereinafter “ITC” Signature Not Verified Signed By:ANKITA RAI Signing Date:17.03.2026 14:48:08 W.P.(C) 5581/2025 prejudice by collapsing distinct causes of action, returns, limitation periods and legal defences. 16. The petitioner has further urged that the reliance sought to be placed by the respondents on the decisions of this Court in Ambika through Proprietor Gaurav Gupta Traders v. Additional Commissioner 7 and Mathur Polymers v. Union of India & Ors. 8 is misconceived in the facts of the present case. As per the petitioner, both the said decisions were rendered in the context of allegations relating to fraudulent availment or utilisation of ITC extending across financial years, whereas the present case, as submitted, does not involve fake invoices, circular trading, non-existent suppliers or clandestine credit chains, but raises a pure issue of classification and rate applicability. It is on this basis that the petitioner contends that the ratio of the said judgments cannot be mechanically applied to the present dispute. 17. It is also urged on behalf of the petitioner, with reference to the written submissions, that several Benches of the Bombay High Court, after considering the very judgments of this Court relied upon by the respondents, have consciously taken a different view in matters not involving ITC fraud, including Milroc Good Earth Developers v. Union of India & Ors. 9 , Rite Water Solutions (India) Ltd. v. Joint Commissioner, CGST & Central Excise, Nagpur & Ors.10, M/s Paras 7 2025 SCC OnLine Del 6913 8 2025 SCC OnLine Del 6892 9 (2025) 36 CENTAX 97 10 2025:BHC-NAG:13213-DB Signature Not Verified Signed By:ANKITA RAI Signing Date:17.03.2026 14:48:08 W.P.(C) 5581/2025 Stone Industries v. Union of India & Ors.11 and AR Traders, through its proprietor Shri Abdul Rashid v. Joint Commissioner, CGST & Central Excise, Nagpur12. The petitioner specifically relies upon Milroc Good Earth Developers to contend that the Bombay High Court distinguished Ambika Traders on the footing that the facts before the Delhi High Court related to wrongful availment of ITC over subsequent years, whereas the matter before it arose in a different factual and legal setting. It is also pointed out that the Bombay High Court took note of the withdrawal of the Special Leave Petition against Ambika Traders with an observation that the said decision would not apply to the facts of other cases, and independently examined the expressions “for any period” and “for such period(s)” in support of year-wise adjudication in non-fraud cases. 18. Heard Mr. Abhishek A. Rastogi, learned Counsel for the petitioner and Ms. Anushree Narain, learned Senior Standing Counsel and perused the documents on record. 19. At the outset, this Court makes it clear that it is not entering into the merits of the controversy as to whether there was, in fact, any fraudulent availment of ITC. That issue lies squarely within the domain of the statutory appellate authority. An efficacious alternative remedy is available to the petitioner by way of an appeal under Section 107 of the CGST Act and Rule 109A of CGST Rules, 2017, which has admittedly 11 2026:BHC-NAG:339-DB 12 2026:BHC-NAG:732-DB Signature Not Verified Signed By:ANKITA RAI Signing Date:17.03.2026 14:48:08 W.P.(C) 5581/2025 not been exhausted. It is well settled that where such an alternative statutory remedy exists, the writ court ordinarily ought not to undertake an examination on merits. This principle stands clearly laid down by the Hon‟ble Supreme Court in a catena of decisions, including Whirlpool Corporation v. Registrar of Trademarks, Mumbai 13 and Harbanslal Sahnia v. Indian Oil Corpn. Ltd.14. 20. This Court shall also deal with the submission advanced by Mr. Rastogi that the decision of this Court in Ambika Traders (Supra) does not govern the present case on the ground that the said judgment arose in the context of fraudulent availment or utilisation of ITC extending across financial years. 21. As already observed hereinabove, this Court is not delving in the present proceedings to determine whether fraud is, in fact, made out and therefore will not undertake the adjudication on that point. However, insofar as the submission seeks to confine Ambika Traders only to cases involving allegations of fraudulent availment or utilisation of ITC across financial years, this Court is unable to agree. In this context, we deem it important to reproduce the relevant para of the said judgment: “43. Insofar as the issue of consolidated notice for various financial years is concerned, a perusal of section 74 of the CGST Act would itself show that at least insofar as fraudulently availed or utilised ITC is concerned, the language used in section 74(3) of the CGST Act and section 74(4) of the CGST Act is “for any period” and “for such periods” respectively. This contemplates that a notice can be issued for a period which could be more than one financial year. Similar is