Delhi High Court Dismisses Writ Petition Due to Fraudulent ITC Claims and Misrepresentation in GST Cancellation Proceedings

In a striking verdict, the High Court of Delhi has condemned the conduct of a taxpayer who attempted to use the judicial process to shield itself from an investigation into fraudulent tax practices. The Bench, comprising Justices Prathiba M. Singh and Shail Jain, dismissed a writ petition filed by M/s Shiva Enterprises seeking the cancellation of its Goods and Services Tax (GST) registration, after discovering that the entity had been systematically misleading both the tax department and the Court.

The Backdrop of the Dispute

The petitioner, M/s Shiva Enterprises , approached the High Court seeking the cancellation of its GST registration, claiming that it had ceased business operations as of July 2025. However, the Department of Trade and Taxes, GNCTD , challenged the petition, pointing to severe irregularities. The respondent Department highlighted that despite a turnover exceeding ₹7 crores within a limited seven-month window, the firm had not paid any GST in cash, raising red flags regarding the legitimacy of its transactions and the utilization of Input Tax Credit (ITC).

Subsequent proceedings revealed that the petitioner had availed of ITC amounting to over ₹1 crore without any corresponding cash deposits. A ground-level inspection of the petitioner's listed business address further confirmed that the firm did not exist at the declared location.

Deception in the Courtroom

In a brazen attempt to challenge the Department’s field report, the petitioner’s proprietor, Mr. Manish Kumar Jha, presented photographic and video evidence to the Court, purportedly showing his operational office. However, the Court dismissed this evidence as a manufactured fabrication. Upon questioning, it was revealed that a business board carrying the name "Shiva Enterprises" had been installed at the premises solely for the purpose of filming the video, despite the premises having been vacated in July 2025.

Key Observations

The Court expressed its severe displeasure at the petitioner's blatant attempt to deceive the judiciary. In its order, the Bench observed:

• "The Petitioner has completely misled the Court about the nature of his business. The entire attempt appears to have been to somehow escape the further legal action by the Department in respect of ITC which is stated to have been availed of from fraudulent entities."
• "Clearly, both Mr. Jha and his landlord are not revealing the true facts and are clearly misleading the Court."
• "The Petitioner has also attempted to completely misrepresent the status of his shop by hanging a board only for the purpose of taking a video. Such conduct cannot be condoned by the Court."

Final Judgment and Costs

Finding that the petitioner had engaged in a clear pattern of misrepresentation and potential tax evasion, the High Court declined to entertain the petition for the cancellation of GST registration. Instead, the Court dismissed the writ petition with a cumulative cost of ₹5,00,000 to be deposited as follows:

• ₹2,00,000 to the Delhi High Court Bar Association .
• ₹2,00,000 to the GST Department (Commissioner, Trade & Taxes, Delhi).
• ₹1,00,000 to the Sales Tax Bar Association.

The petitioner has been directed to clear these payments within two weeks, ensuring that the Department of Trade and Taxes remains empowered to proceed with necessary legal action against the firm for its fraudulent activities. The judgment serves as a stern warning against using writ jurisdiction to cover up illicit business practices and systemic tax fraud.