High Court of Delhi Issues Stern Warning Against Fabricated GST Petitions and Identity Theft in Tax Litigation

From Blacksmith to Boss: Delhi HC Exposes Shell Firm Scam in GST Litigation

In a startling revelation that has sent shockwaves through the tax bar, the High Court of Delhi has unearthed a sophisticated racket involving the filing of petitions by fictitious GST firms. In the matter of M/S S K Overseas vs Superintendent Range 20 , the court discovered that the purported proprietor of the firm, a man named Mr. Suraj, was an unwitting victim of identity theft.

The Anatomy of a Phantom Petition

The case, initially brought to challenge the cancellation of a GST registration, took a dark turn upon review. It was revealed that the man identified as the proprietor of 'S K Overseas' was, in reality, a local blacksmith who had no knowledge of the firm, the registered mobile numbers, or even the documents bearing his signatures.

The investigation into the petitioner’s credentials revealed that the entire identity was likely manufactured. The court noted with alarm that the legal counsel for the petitioner had never even met the client, relying entirely on referrals from an accountant, Mr. Ashish Chaurasia of AMR & Associates , to push the litigation forward.

A Pattern of Fabricated Justice

This is not an isolated incident. The bench, led by Justice Prathiba M. Singh and Justice Harish Vaidyanathan Shankar, observed a growing trend of "ghost" litigation in their roster. These cases often involve firms registered under stolen PAN credentials, with fake affidavits notarized without the principal ever stepping into a lawyer's chamber.

The Court, referencing an earlier order in M/s. S R Enterprises v. Pr. Commissioner of Goods and Service Tax , emphasized that habitual reliance on third-party consultants to "verify" clients by legal professionals poses a fundamental threat to the integrity of the judicial process.

The Court’s Firm Stance

The Court has taken immediate corrective action, focusing on both the professional responsibility of counsel and the necessity for a deep-dive investigation into the architects of these frauds.

> "Repeatedly, this Court notes that various fictitious persons, in whose names the firms are registered by impersonating or stolen identity, have approached the Court. In such matters, lawyers have not even met the clients and the affidavits have been attested and notarized without meeting the clients."

Furthermore, the Court directed the Registrar General to initiate inquiry proceedings regarding forgery under the Bharatiya Nyaya Sanhita, 2023 .

Seeking Accountability

The most critical immediate development is the summons issued to the accountant, Mr. Ashish Chaurasia. By mandating his physical presence in court, the bench has signaled that the practice of outsourcing client verification to non-legal consultants will no longer be tolerated.

The order, to be served via WhatsApp and the local SHO, serves as a warning that the court is moving beyond the surface of pleadings to identify the actual puppeteers behind frivolous and fraudulent tax litigation. As the next hearing approaches, the legal community remains on notice: the era of the "faceless client" in Delhi’s tax courts is swiftly coming to an end.

---

Key Observations

• On Counsel Duty: "In future, when GST matters are filed, ld. Counsels shall take some precautionary measures to ensure that the documents that are attached are not forged and fabricated."
• On the Nature of Fraud: "In view of the fact that the affidavits as also the documents... in the present matter are forged and the persons i.e. Petitioners are fictitious, it is deemed expedient in the interest of justice that an inquiry ought to be conducted for the offences of forgery, fabrication, etc."
• On Client Verification: "Lawyers have not even met the clients and the affidavits have been attested and notarized without meeting the clients."