GST SCN Properly Uploaded, No Reply Filed: Delhi HC Declines Interference in Fraudulent ITC Case [Read Order]

The Delhi High Court has declined to entertain a writ petition filed by the petitioner challenging a Goods and Services Tax (GST) demand order, holding that when the show cause notice (SCN) was properly uploaded in the portal, and the petitioner failed to respond, there is no need for interference by the court. The Bench relegated the petitioner to avail the statutory appellate remedy under Section 107 of the CGST Act, 2017.

The impugned order had raised a demand of ₹34.47 lakh against the petitioner for alleged fraudulent availment of Input Tax Credit (ITC).

The Court noted that the matter arose from a large‑scale investigation into fraudulent ITC transactions involving 16 non‑existent firms, which had transferred ITC worth more than ₹122 crore to 1155 taxpayers.

VSA Trading, the petitioner, was listed as noticee number 68, with liability fixed at ₹34.47 lakh. The petitioner argued a violation of natural justice and pointed to a typographical error in the notice regarding the due date for reply. However, the Court observed that even if the date error was considered, no reply had ever been filed on the merits.

Justice Prathiba M. Singh, speaking for the Bench, emphasised that in such cases involving fraudulent ITC, writ jurisdiction is ordinarily not maintainable. The Court observed: “In matters of this nature, where there are a large number of noticees who are connected to each other, the SCN has been properly uploaded on the portal and no satisfactory reply is filed by the Petitioner, the Court shall not interfere.”

The Division Bench of Justice Prathiba M. Singh and Justice Renu Bhatnagar relied heavily on precedents. The Supreme Court in The Assistant Commissioner of State Tax & Ors. v. M/s Commercial Steel Limited had held: “The respondent had a statutory remedy under Section 107. Instead of availing of the remedy, the respondent instituted a petition under Article 226. The existence of an alternate remedy is not an absolute bar… but a writ petition can be entertained only in exceptional circumstances… In the present case, none of the above exceptions was established.”

Similarly, in Mukesh Kumar Garg v. Union of India (2025), the Delhi High Court had observed: “The allegations against the Petitioner in the impugned order are extremely serious in nature. They reveal the complex maze of transactions… Such misuse, if permitted to continue, would create an enormous dent in the GST regime itself… The impugned order is an appealable order under Section 107 of the CGST Act.”

The Court also cited M/s Sheetal and Sons v. Union of India (2025) and M/s MHJ Metal Techs v. CGST Delhi South (2025), reiterating that fraudulent ITC cases demand factual analysis and cannot be adjudicated in writ jurisdiction.

Applying these principles, the Bench held that the petitioner must pursue the statutory appellate remedy. It directed that if an appeal is filed by 15 January 2026 along with the requisite pre‑deposit, it shall be entertained on merits and not dismissed on limitation grounds.

The Court also issued an advisory to the CGST Department, noting repeated errors in notices and orders, and directed that caution be exercised in future while mentioning financial years, due dates, and material particulars. Copies of the order were directed to be circulated to all Commissionerates for compliance.

With these observations, the writ petition was disposed of, reinforcing the settled position that fraudulent ITC matters require factual adjudication before the appellate authority under Section 107 of the CGST Act, and writ jurisdiction under Article 226 cannot be invoked to bypass the statutory remedy.

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