Overlapping GST Demands Involving Fictitious ITC Claims: Delhi HC Allows Appeals with Requisite Pre-Deposit [Read Order]

The High Court of Delhi, allowed the appeals with requisite pre-deposit in cases involving overlapping Goods and Service Tax ( GST ) demands and fictitious Input TaxCredit ( ITC ) claims.

R.U. Overseas,petitioner-assessee, had challenged three GST orders before the Court.The first order dated 24th August, 2024, was issued by the Delhi GST Department for under-declaration of output tax and excess ITC claims, including ITC from cancelled dealers. The total demand was Rs. 8.96 lakh, including Rs. 4.64 lakh as tax. The petitioner had already filed an appeal against this order.

The second order dated 24th January, 2025, arose from an investigation into multiple firms showing inflated outward supplies of Rs. 3,470 crore, claiming ITC of Rs. 677.76 crore, while inward supplies were only Rs. 1,080 crore. The petitioner was found to have received ITC of Rs. 4.64 lakh. The total demand was Rs. 2.60 crore.

The third order dated 1st February, 2025, concerned ITC of Rs. 99.99 lakh obtained by the petitioner from M/s Fortune Graphics Limited during an investigation against M/s Choudhary Metals and M/s Kavita Metals.

The assessee counsel, argued that there were overlaps in the orders, between impugned order No.1 and No.2 for M/s Ganpati Enterprises, and between impugned order No.2 and No.3 for M/s Fortune Graphics Limited. He stated that due to these overlaps and parallel demands raised by DGST, CGST (East), and CGST (North), the writ petition had been filed.

The opposing counsel contended that the cases involved fraudulent ITC and that the petitioners had an alternate remedy through appeals, which, however, were barred by the limitation period.

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Justice Prathiba M Singh and Justice Shail Jain noted that the impugned orders involved several fictitious or non-existent third-party firms that had claimed ITC without actual supply of goods or services. Although some overlap existed in the Petitioner’s case, the challenges had to be addressed through the appeals, as the ITC related to thousands of entities and amounted to several hundred crores.

The Court directed that the Petitioner could challenge impugned order No.2 and impugned order No.3, dated 24th January, 2025, and 1st February, 2025, respectively, by filing appeals before the Appellate Authority.

Pre-deposit was required only for the demand under DRC-07 dated 3rd February, 2025, linked to impugned order No.2, after deducting Rs. 3,43,082 already paid for M/s Ganpati Enterprises.

No pre-deposit was required for the appeal against impugned order No.3, as the demand overlapped with order No.2. The Appellate Authority was directed to note that the demand for M/s Fortune Graphics Limited under impugned order No.2 had already been raised.

The Court further held that the Show CauseNotice dated 6th August, 2024, proposing a demand of Rs. 2,43,000 for M/s Nymphaea Trademart Pvt. Ltd., overlapped with impugned order No.1 and would not proceed against the Petitioner.

The Petitioner was ordered to file the appeals by 15th November, 2025, with the requisite pre-deposit. The petition and all pending applications were disposed of.

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