Delhi HC Refuses to Entertain Writ in Fake GST ITC Case, Holds ITC Involves Series of Transactions Requiring Detailed Analysis [Read Order]
The petitioner was relegated to avail the appellate remedy, with liberty to raise all its grounds, including the alleged non-consideration of its reply
The Delhi High Court has declined to entertain a writ petition challenging a demand order in an alleged fake Input Tax Credit (ITC) under Goods and Services Tax (GST). The Court held that issues relating to fraudulent ITC claims involve multiple layers of transactions and require a detailed factual examination, which cannot be undertaken in writ jurisdiction under Article 226 of the Constitution.
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The petitioner, S D Polymers had assailed the show cause notice (SCN) dated 5 August 2024 and the consequent order-in-original dated 1 February 2025, followed by a demand of over ₹2.18 crore. It was argued that the petitioner’s reply to the SCN was not duly considered and no proper personal hearing was provided, besides raising a plea of limitation.
However, the Department contended that opportunities were given, and the order was passed within the limitation period, though uploaded on the GST portal at a later date due to technical reasons.
The Court observed that the case formed part of a larger investigation involving multiple non-existent firms alleged to have issued goods-less invoices to pass on fraudulent ITC to as many as 106 entities.
The bench referred to its earlier order in Ganpati Polymers v. Commissioner, CGST arising from the same SCN, and relying on the Supreme Court decision in Commercial Steel Ltd. (2021) and held that where statutory appellate remedies are available under Section 107 of the CGST Act, writ petitions cannot be entertained unless exceptional grounds such as violation of fundamental rights or lack of jurisdiction are made out.
Justice Prathiba M. Singh and Justice Shail Jain said that “this Court does not deem it appropriate to delve into the facts of this case under writ jurisdiction as the concept of ITC by itself involves a series of transactions, which would have to be analyzed and, thereafter, the decision is to be taken.”
Consequently, the petitioner was relegated to avail the appellate remedy, with liberty to raise all its grounds, including the alleged non-consideration of its reply. The Court directed that if the appeal, along with the mandatory pre-deposit, is filed by 30 September 2025, it shall not be dismissed on limitation grounds and must be decided on merits.
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