Duplication of GST demand by Central Dept on Fake ITC: Delhi HC Refuses to Entertain Writ, Directs for Appeal [Read Order]

The Delhi High Court has refused to entertain a writ petition challenging a GST ( Goods and Services Tax ) demand order, passed by central GST authorities over alleged fraudulent availment of Input Tax Credit ( ITC ) for the assessmentyear 2017-18, which was earlier proceeded by the state GST department.

However, the bench of Justice Prathiba M. Singh and Justice Shail Jain held that since the dispute involved allegations of fraudulent ITC claims and the impugned order was appealable under Section 107 of the CGST Act, the petitioner must exhaust the statutory appellate remedy before approaching the Court. Also, the court directed to raise the ground of the duplication of CGST order before the appellate authority.

An investigation was made by the Directorate General of GST Intelligence into non-existent firms engaged in bogus invoicing to wrongfully avail ITC. Four suppliers M/s Sahni Traders, M/s M.R. Enterprises, M/s S.K. Traders, and M/s Mahaveer Impex were found to have passed on ITC to 76 recipients, including the petitioner.

The alleged wrongful ITC availed by petitioner amounted to ₹1,48,333 (₹74,166 each towards CGST and SGST). A show cause notice was issued on August 3, 2024, followed by a reply from the petitioner the next day, culminating in a final order confirming the demand and penalties under Section 74(9) of the CGST Act.

The petitioner argued that for the same assessment year, the Delhi GST Department had also issued a notice which had already culminated in a final order, making the central GST proceedings duplicative.

However, relying on its earlier ruling in Mukesh Kumar Garg v. Union of India, the Court stated that writ jurisdiction under Article 226 is not ordinarily exercised in cases of alleged fraudulent ITC availment, given the need for detailed factual analysis and the existence of an appellate mechanism.

While dismissing the writ, the Court directed the petitioner to appeal by August 31, 2025. The court also instructed the department not to reject the appeal and time-barred and shall be decided on merits.

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