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2025 Supreme(Online)(Del) 3426
IN THE HIGH COURT OF DELHI AT NEW DELHI
Prathiba M. Singh, Rajneesh Kumar Gupta, JJ
HIGH PRECISION CORPS – Appellant
Versus
COMMISSIONER OF STATE GOODS AND SERVICE TAX, DELHI AND ANR – Respondent
W.P.(C) 9266/2025
For the Appellants/Petitioners: Mr. R. K. Bhalla
For the Respondents: Mr. Sumit K. Batra
Writ jurisdiction should not substitute for factual resolution in cases alleging fraudulent Input Tax Credit claims, necessitating appeal under CGST Act.
Headnote:(A) Constitution of India - Article 226 - Challenge to impugned order raising demand under CGST Act - The Petitioner contested a demandofRs.65,21,410/- based on a Show Cause Notice that implied no actual supply was made - The court considers the exercise of writ jurisdiction cautiously in cases of fraudulent availment of Input Tax Credit (ITC) and emphasized the need for consideration of appeals under Section 107 of the CGST Act for challenging such orders (Paras 7, 9-10).
(B) Input Tax Credit - Section 16 of the CGST Act - The ability for businesses to claim ITC is essential for encouraging ease of doing business and should not give rise to fraudulent claims undermining this facility (Paras 12-14).
Facts of the case:
The writ petition challenges a demand related to fraudulent activities regarding ITC claimed from non-existent firms following a Show Cause Notice.
Findings of Court:
The Court notes that the allegations against the Petitioner are serious, involving a maze of fraudulent transactions and non-existent firms creating a detrimental impact on the GST framework.
Issues: Whether to maintain writ jurisdiction in fraudulent ITC cases and if the matter should be appealed under the CGST Act.
Ratio Decidendi: The Court directed that the Petitioner must file an appeal under Section 107 of the CGST Act, as the issues presented require a factual analysis inappropriate for writ jurisdiction.
Result: Writ petition disposed of, granting one month to appeal.
| Table of Content |
|---|
| 1. conclusion directing appeal without burden of limitation. (Para 1) |
| 2. demand based on non-existent suppliers and fraudulent itc. (Para 2 , 6) |
| 3. challenge to tax demand based on alleged fraudulent claims. (Para 3 , 5) |
| 4. writ jurisdiction limitations; necessary recourse to appeal. (Para 7) |
| 5. arguments for maintainability of writ petition. (Para 8) |
JUSTICE PRATHIBA M. SINGH JUSTICE RAJNEESH KUMAR GUPTA Prathiba M. Singh, J. (Oral)
1. This hearing has been done through hybrid mode.
2. The present writ petition has been filed by the Petitioner under Article 226 of the Constitution of India, challenging the impugned order dated 28th February, 2025 by which a demand has been raised on the Petitioner to the tune of Rs. 65,21,410/-.
3. The said demand arises out of a Show Cause Notice dated 18th November, 2024 (hereinafter, ‘the SCN’) to which the Petitioner had filed a reply dated 6th December, 2024, but the same has been considered and rejected on the ground that the GST Registration of the suppliers has been cancelled and the suppliers are non-existent. The impugned order holds that the firms are non-existent and no supply of goods and services has actually taken place.
Signature Not Verified Signed By:NAMITA W.P.(C)9266/2025 Page1of5
4. The SCN was issued containing the following heads:
i. Under declaration of ineligible Input Tax Credit (ITC)
ii. ITC claimed from cancelled dealers, returned defaulters and tax non-payers.
5. In so far as the first heading i.e. Under declaration of ineligible Input Tax Credit (ITC) is concerned, the adjudicating authority agreed with the submissions made by the Petitioner on the basis of the documents produced by the Petitioner and information on the GST portal. The said demand was dropped and declared as NIL.
6. Insofar as the second head i.e., ITC claimed from cancelled dealers, returned defaulters and tax non-payers is concerned, the decision of the adjudicating authority is that there was no supply of goods and services and the firms were found to be non-existent and fraudulent, thus, the demand was raised in the impugned order.
7. Mr. R.K. Bhalla, ld. Counsel for the Petitioner has vehemently urged that the present writ petition would be maintainable in view of the fact that the amendment to Section41of the Central Goods and Service Tax Act,2017 (hereinafter, ‘CGST Act’) was introduced only on 01st October, 2022 and in the impugned order, the adjudicating authority has wrongly invoked Section
16 (2)(c) read with section 41 of CGST Act, with retrospective effect.
8. The Court has heard the submissions made and has considered the matter. In W.P.(C)5737/2025 titledMukeshKumarGargvs.UnionofIndia & Ors., this Court has already taken a view in this regard that where cases involving fraudulent availment of ITC are concerned, considering the burden on the exchequer and the nature of impact on the GST regime, writ jurisdiction, though not barred, ought to be exercised sparingly and in Signature Not Verified Signed By:NAMITA W.P.(C)9266/2025 Page2of5 exceptional cases. The relevant portions of the said judgment are set out below:
“11. The Court has considered the matter under Article 226 of the Constitution of India, which is an exercise of extraordinary writ jurisdiction. The allegations against the Petitioner in the impugned order are extremely serious in nature. They reveal thecomplexmazeoftransactions,whicharealleged to have been carried out between various non- existent firms for the sake of enabling fraudulent availment of the ITC.
12. The entire concept of Input Tax Credit, as recognized under Section 16 of the CGST Act is for enabling businesses to get input tax on the goods and services which are manufactured/supplied by them in the chain of business transactions. The same is meant as an incentive forbusinesseswho need not paytaxeson the inputs, which have already been taxed at the source itself. The said facility, which was introduced under Section 16 of the CGST Act is a major feature of
