Delhi HC Rules Fraudulent GST ITC Case Not Fit for Writ Jurisdiction Owing to Complex Transactions [Read Order]

The Delhi High Court has refused to entertain a writ petition filed by M/s R Gupta Metal Store challenging a demand order under the GST regime. The Court held that cases involving fraudulent availment of Input Tax Credit (ITC) and complex transactional networks are not suitable for adjudication under writ jurisdiction.

The petitioner, R Gupta Metal Store, was one among 670 parties named in notices issued during a large‑scale investigation into fake invoicing in Delhi’s Sita Ram Bazar and Naya Bazar. Authorities discovered 55 non‑existent supplier firms that had allegedly passed on inadmissible ITC worth over ₹553 crore to nearly 5,962 recipient firms. The petitioner was listed at serial number 209, and following investigation, a demand order dated 4 February 2025 was issued against it.

A showcause notice (SCN) was served on 3 August 2024, to which the petitioner filed a reply on 14 October 2024. The petitioner argued that its reply and supporting documents were not properly considered by the adjudicating authority, and therefore approached the High Court under Article 226 seeking relief.

Counsel for the petitioner submitted that the adjudicating authority had failed to consider the reply and documents filed in response to the SCN. It was argued that this amounted to a violation of principles of natural justice, warranting interference by the High Court in writ jurisdiction. The petitioner sought quashing of the demand order and protection against coercive recovery.

The Department opposed the maintainability of the writ petition, stressing that the case involved fraudulent ITC claims. It relied on settled precedents to argue that writ jurisdiction is not appropriate in such matters, which require detailed factual analysis of complex transactions and voluminous evidence. The Department further submitted that the petitioner had an alternate statutory remedy of appeal, which ought to be pursued instead of invoking Article 226.

The Division Bench of Justice Prathiba M. Singh and Justice Shail Jain examined the scope of writ jurisdiction in GST matters. Referring to the Supreme Court’s ruling in Commercial Steel Ltd. (2021) and earlier Delhi High Court decisions (Mukesh Kumar Garg, MHJ Metal Techs, Giftco Exports), the Court reiterated that writ petitions are not maintainable in fraudulent ITC cases unless exceptional circumstances are shown.

The court observed that it has consistently taken the view that in cases involving fraudulent availment of ITC, ordinarily, the Court would not be inclined to exercise its writ jurisdiction. It was further observed that it is routinely seen in such cases that there are complex transactions involved, which require factual analysis and consideration of voluminous evidence, as also the detailed orders passed after investigation by the Department.

It was further observed that in such cases, it would be necessary to consider the burden on the exchequer as well as the nature of impact on the GST regime, and balance the same against the interest of the Petitioners, which is secured by availing the right to statutory appeal.

The Court observed that fraudulent ITC claims involve complex transactional webs, requiring factual adjudication and examination of evidence. Such matters cannot be decided in writ jurisdiction, which is meant for extraordinary cases involving breach of fundamental rights, violation of natural justice, or excess of jurisdiction. Since the petitioner’s case did not fall within these exceptions, the writ petition was not entertained.

The Court disposed of the writ petition, granting liberty to the petitioner to file an appeal against the demand order by 30 November 2025 along with the requisite pre‑deposit. It clarified that if the appeal is filed within the stipulated time, it shall be adjudicated on merits and not dismissed as time‑barred. The Court also permitted the petitioner to rely on the reply and documents filed earlier, noting that the impugned order had not discussed them in detail.

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