Delhi HC Dismisses Petition of Massive GST Fraud of Rs. 155cr Citing Impact on Exchequer and GST [Read Order]
According to the Court, filing such petitions runs the risk of permitting evasion of statutory remedies and interfering with due process, as fraudulent use of ITC threatens the fundamental basis of the GST system.
![Delhi HC Dismisses Petition of Massive GST Fraud of Rs. 155cr Citing Impact on Exchequer and GST [Read Order]](https://www.taxscan.in/wp-content/uploads/2025/05/gst-fraud-hc-Taxscan.jpg "Delhi HC Dismisses Petition of Massive GST Fraud of Rs. 155cr Citing Impact on Exchequer and GST [Read Order]")
The Delhi High Court, while dismissing the writ petition of huge Goods and Services Tax ( GST ) fraud involving Rs. 155 crores, has reiterated that writ jurisdiction under Article 226 of the Constitution should not be exercised in cases involving allegations of fraudulent availment of Input Tax Credit ( ITC ) under the Goods and Services Tax ( GST ) considering the impact on GST...
The Delhi High Court, while dismissing the writ petition of huge Goods and Services Tax ( GST ) fraud involving Rs. 155 crores, has reiterated that writ jurisdiction under Article 226 of the Constitution should not be exercised in cases involving allegations of fraudulent availment of Input Tax Credit ( ITC ) under the Goods and Services Tax ( GST ) considering the impact on GST and exchequer.
The Court was hearing writ petitions filed by M/s MHJ Metaltechs Pvt. Ltd. and related entities, challenging a demand order issued on the ground of fraudulent ITC claims aggregating over ₹7 crore, with an overall GST implication of ₹155 crore.
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A network of firms allegedly orchestrated by an individual, Mr. Mohit Jain, for generating invoices without the actual supply of goods, thereby enabling fraudulent ITC. Despite being issued a show cause notice and afforded a personal hearing on January 3, 2025, the petitioners contended that they were denied a fair opportunity and that the documents supplied (relied-upon documents or RUDs) were illegible.
However, the bench, referring to Section 75(5) of the CGST Act, clarified that while no more than three adjournments may be granted for personal hearings, the provision does not guarantee a right to three separate hearings. As long as one proper hearing is granted, and notice is duly served, the principles of natural justice are not violated.
The Court noted that in the present case, the petitioners had indeed attended the hearing and submitted a reply, which, however, did not address the central issue of whether goods were actually supplied.
Justices Prathiba M. Singh and Rajneesh Kumar Gupat held that cases involving fraudulent ITC claims cannot be entertained under writ jurisdiction, as such cases involve serious allegations, complex factual disputes, and financial implications for the exchequer.
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The whole basis of the GST structure, which is intended to allow input tax benefits only for legitimate transactions, is undermined by the fraudulent use of ITC, it was noted. Permitting such petitions will encourage dishonest litigants to evade statutory remedies in addition to interfering with the adjudicatory process, noted the court by relying on judgment in Mukesh Kumar Garg vs. Union of India & Ors.
The Court stated that the impugned GST order was appealable under Section 107 of the CGST Act, and the petitioners were free to pursue their remedy before the appellate authority. Accordingly, the petitions were dismissed, though liberty was granted to the petitioners to file an appeal by July 15, 2025, along with the required pre-deposit.
Also read: GST 2.0: Here’s All we Know So Far
To Read the full text of the Order CLICK HERE
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