EOW Must Probe GSTIN Misuse and Impersonation; GST Dept's Powers Under S.132 CGST Act Not Exhaustive for Third-Party Fraud: Delhi High Court - 2025-08-28

Delhi High Court Orders EOW Probe into Alleged Rs. 48 Crore GST Fraud, Citing Impersonation

New Delhi: The Delhi High Court has directed the Economic Offences Wing (EOW) of the Delhi Police to launch a formal investigation into a complaint by a businessman who claims his provisional GST number was hijacked and used to conduct fraudulent transactions, resulting in a staggering tax demand of over Rs. 48 crores.

The Division Bench, comprising Justice Prathiba M. Singh and Justice Shail Jain , clarified that allegations of impersonation and fraudulent misuse of a taxpayer's credentials by an unknown third party fall squarely within the investigative purview of the police, and cannot be merely forwarded to the GST department for action.

Background of the Case

The petition was filed by Mr. Samyak Jain, who challenged an order dated January 31, 2025, from the Central GST department that raised a demand of more than Rs. 48 crores against his firm, 'M/s Samyak International'.

Mr. Jain contended that he had closed his business under this name on July 28, 2017, before the full implementation of the GST regime. He claimed that a provisional GST number was allotted to the defunct firm without his request. He later discovered that this number was being used to illicitly avail and pass on a substantial amount of Input Tax Credit (ITC), all of which he disowned.

His initial complaint to the EOW in September 2022 was not investigated; instead, the police forwarded it to the GST department in February 2023, stating that the GST department had the power to investigate such matters. This led Mr. Jain to approach the High Court for relief.

Court's Rationale and Directions

The High Court expressed its disapproval of the EOW's inaction, noting that the police appeared to have a "misunderstanding" regarding the scope of the GST department's investigative powers.

The bench distinguished between offences that the GST department can take cognizance of under Section 132 of the CGST Act, 2017, and criminal acts of impersonation and fraud by third parties.

"The allegation here is that the GST number of the Petitioner has been misused by a third party, who is unknown... In the opinion of this Court, under such circumstances where the allegation of the Petitioner is that there is an impersonation of the Petitioner’s credentials, the matter ought to be investigated by the Economic Offences Wing."

The Court highlighted the EOW's perfunctory handling of the complaint, where it merely acted as a post office by forwarding the matter.

Final Decision and Implications

The High Court has issued clear directives: 1. EOW Investigation: The Economic Offences Wing of the Delhi Police is ordered to investigate Mr. Jain's complaint and take action in accordance with the law. 2. Inter-Departmental Cooperation: The GST department must forward all relevant documents concerning the petitioner's credentials to the EOW and cooperate fully with the investigation. 3. Status Report: The EOW must file a fresh status report before the Court detailing the progress of its investigation.

While ordering the police probe, the Court maintained its previous direction from July 7, 2025, that the petitioner must pursue his statutory remedy against the tax demand by filing an appeal under Section 107 of the CGST Act. The Court had previously granted him a one-month extension to file this appeal, which his counsel confirmed has been done.

The case is scheduled for its next hearing on November 12, 2025, when the Court will review the EOW's status report. This judgment sets a crucial precedent, delineating the jurisdictional lines between tax authorities and criminal investigation agencies in cases of GST-related identity theft and fraud.