Introduction

The dispute arose from adjudication proceedings initiated against M/s. Suguna Metals Limited and its Managing Director, Mr. Bharat Kumar Agarwal, pursuant to a common Show Cause Notice (Form GST DRC-01) dated 27.06.2025. The department alleged that the company had fraudulently availed and utilised irregular Input Tax Credit (ITC) and had passed on fraudulent ITC by issuing invoices without actual supply of goods, thereby attracting proceedings under Section 74 of the CGST Act along with Section 122 relating to penalties. After adjudication, the Joint Commissioner passed a common Order-in-Original dated 30.12.2025 confirming tax, interest and penalty against the company and also imposed a separate penalty upon the Managing Director under Section 122(1A) for his alleged role in facilitating and benefiting from the fraudulent transactions. Subsequently, only one composite Form GST DRC-07 was issued covering both the company and its Managing Director. Since the Managing Director was not a registered person under GST and had no GST registration number, he was unable to file a statutory appeal against the order. Aggrieved by the inability to exercise the appellate remedy due to the procedural defect, both the company and its Managing Director approached the Telangana High Court.

Issues Before the Court

The High Court considered the following issues: