₹550 Crore GST Fake Invoice Scam: Delhi HC refuses to Entertain Petition, directs to Seek Appellate Remedy [Read Order]

In a recent ruling involving a Goods and Services Tax ( GST ) fraud billing a bogus bill of Rs. 550 cores, the Delhi High Court declined to hear the petition. It ordered the petitioner to move the appellate forum for relief as the present case does not suit the writ jurisdiction.

The case arose from an Order-in-Original dated January 31, 2025, issued by the Joint Commissioner, Adjudication, CGST, Delhi North, which raised a demand exceeding ₹550 crores against multiple entities, including the petitioner.

According to the Department, an extensive investigation was conducted into 286 entities suspected of GST evasion, with the modus operandi involving the issuance of bogus invoices for packaging materials to various firms that were either non-existent or non-operational.

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The Department alleged that, in reality, the packaging material was being diverted to paan masala and tobacco manufacturing units, and that the petitioner’s directors and promoters had established several other companies to facilitate these bogus sales.

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Following the investigation, Montage Enterprises reportedly initiated insolvency proceedings under the Insolvency and Bankruptcy Code, 2016, in respect of the implicated companies.

The Department further asserted that various depots, transporters, and firms involved were also found to be bogus and non-operational, with GSTIN numbers cancelled after short periods of activity.

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The Show Cause Notice (SCN), issued on July 30, 2024, detailed these findings and named 286 firms, including purchasers from the petitioner. Despite being served the SCN, the petitioners initially sought an extension to reply, citing their advocate’s unavailability, but did not file a response for several months. It was only on December 16, 2024, that they requested the relied upon documents (RUDs), and subsequently appeared for a personal hearing on January 28, 2025, submitting a voluminous reply.

The petitioners contended before the High Court that they were not provided with all RUDs and were denied the opportunity to cross-examine witnesses whose statements were relied upon by the Department. However, the Department countered that most RUDs were already available to the petitioners through other proceedings, including insolvency cases.

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The Court observed that the petitioners had delayed seeking the RUDs and were not diligent in pursuing their remedy, noting that their reply to the SCN was filed only at the last moment, just before the expiry of the statutory limitation period for passing the final order.

The bench also noted allegations by the Department that insolvency proceedings had been fraudulently initiated to frustrate recoveries.

The Division Bench comprising Justice Prathiba M. Singh and Justice Rajneesh Kumar Gupta held that this was not a fit case for the exercise of extraordinary writ jurisdiction under Article 226 of the Constitution.

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The Court directed the petitioners to avail their appellate remedies, clarifying that if an appeal is filed within 30 days along with the requisite pre-deposit, it shall be entertained on merits and not dismissed on limitation grounds.

The Court stated that the court’s observations would not prejudice the appellate proceedings, and disposed of the petition and pending applications accordingly.

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To Read the full text of the Order CLICK HERE

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