Delhi HC Declines to Entertain Writ in alleged Fake GST ITC Case Involving 18 Firms, Directs to avail Statutory Appeal [Read Order]

In a recent ruling, the Delhi High Courtdeclined to entertain a writ petition in an alleged fake Input Tax Credit case involving the creation of 18 firms, and directed the petitioner to avail the statutory GST appellate remedy.

Braham Prakash, proprietor of Shri Shyam Trading Co., the petitioner, filed a writ petition challenging an adjudication order dated 21 January 2025 passed by the Additional Commissioner, Adjudication, CGST Delhi North. Through the impugned order, tax demands were raised against him on allegations of wrongful availment of ITC.

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The petitioner’s case arose from an investigation conducted by the Directorate General of GST Intelligence, Rohtak, against one Praveen Jain of Sonepat. The investigation revealed that Praveen Jain had allegedly created a network of 18 fake firms in Delhi for the sole purpose of generating fraudulent ITC.

During searches, documents and electronic devices were seized, and statements were recorded. The investigation further revealed that around 374 entities had allegedly purchased goods from these firms, one of which was the petitioner.

A show-cause notice dated 23 July 2024 was issued to the petitioner, followed by the adjudication order raising tax, interest, and penalty. The petitioner approached the High Court claiming that no personal hearing was granted before passing the order and that the show cause notice was uploaded on the GST portal after the period of limitation had expired.

The petitioner’s counsel argued that the absence of a personal hearing amounted to a violation of principles of natural justice and that the delayed uploading of the show cause notice rendered the entire proceedings invalid.

The GST department argued that the impugned order was appealable under Section 107 of the CGST Act and that the writ petition was not maintainable. The department pointed out that the case involved serious allegations of fake ITC supported by investigation material and evidence, which required detailed factual examination. It was argued that such issues could not be decided in writ proceedings.

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The Division Bench of Justice Prathiba M. Singh and Justice Shail Jain observed that the High Court has consistently taken the view that writ jurisdiction should not be exercised in cases involving alleged fraudulent availment of ITC. The court explained that such cases involve complex transactions, voluminous records, and serious implications for the GST regime, making them unsuitable for adjudication under Article 226.

The court also observed that the petitioner had an effective alternative remedy by way of a statutory appeal, where issues relating to limitation and personal hearing could be properly examined.

In view of this, the Delhi High Court declined to entertain the writ petition and granted liberty to the petitioner to file an appeal under Section 107 of the CGST Act. The court directed that if the appeal is filed by 15 January 2026 along with the required pre-deposit, it shall not be rejected on the ground of limitation and shall be decided on merits. The writ petition was disposed of accordingly.

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