Complex GST ITC Fraud Requires Factual Determination: Delhi HC Rejects Writ Jurisdiction and Directs Appellate Remedy [Read Order]
The Delhi High Court referred to numerous precedents which shaped how High Courts were to regard cases pertaining to GST ITC Fraud.
The Delhi High Court recently declined to exercise its writ jurisdiction in a matter arising from allegations of fraudulent Input Tax Credit (ITC), clarifying that complex matters pertaining to fraud in Goods and Services Tax (GST) requires extensive factual analysis. The High Court accordingly directed the petitioner to pursue the statutory appellate remedy.
The present writ petition was filed by M/s Aman Sanitation, challenging an Order-in-Original dated 21 January 2025, by which a GST demand of ₹1,11,41,684 was raised against the petitioner.
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The proceedings originated from an investigation into ITC transfers involving sixteen taxpayers whose filings reflected substantial outward ITC without corresponding inward supplies.
The Department traced the flow of credit through seventy-two previously identified firms that were non-existent along with seven additional entities, which resulted in more than ₹122 crores ITC being fraudulent disbursed to 1,155 taxpayers. The petitioner appeared at serial number 19 in the list of arraigned entities.
It is in this situation that the present writ petition was filed before the Delhi High Court.
Shivender Kr. Sharma, appearing for the petitioner, submitted that no personal hearing was granted and that its reply to the show-cause notice, dated 5 August 2024 had not been considered before passing the Order-in-Original.
Pranay Mohan Govil, appearing for the Department, stated that the filing of the reply had been mentioned in the impugned order and that the same was considered in the detailed impugned order.
The Bench of Justice Prathiba M. Singh and Justice Shail Jain noted that the allegations concerned a complex maze of transactions involving multiple non-existent firms and substantial amounts of ITC transfers among the involved entities.
The Court reiterated that in matters involving fraudulent ITC, writ jurisdiction is ordinarily not exercised, as the issues require factual examination of transactions, suppliers, invoices and interlinked entities. The Court referred to the principles governing exercise of writ jurisdiction and emphasised that statutory appellate remedies under Section 107 of the CGST Act exist for adjudication of such disputes.
The High Court referred to the Supreme Court decision in The Assistant Commissioner of State Tax & Ors. v. M/sCommercial Steel Limited (2021 TAXSCAN (SC) 130) where the apex court laid down the statutory exceptions where a petition under Article 226 of the Constitution may be entertained by the Courts.
The Court also noted that the same impugned order had earlier been examined by it in Toshniwal Electricals Pvt Ltd through its Director Mukund Maheshwari v. The Principal Commissioner of Central Tax Delhi North & Ors. (2025), where a similar challenge was not entertained. In the present case, the petitioner had received notices, filed replies, and had the opportunity to participate in the adjudication process. No exceptional circumstance was shown to justify invoking Article 226.
Given the circumstances, the Delhi High Court declined to entertain the writ petition and directed the petitioner to avail the appellate remedy under Section 107 of theCGST Act.
The petitioner was permitted to file the appeal by 5 January 2026 along with the requisite pre-deposit, whereupon the appeal would be considered on merits and not be dismissedSupport our journalism by subscribing to Taxscan premium. Follow us on Telegram for quick updates
