Facts of the Case

Tech Plast, through its proprietor Deepmani Jain, challenged a show cause notice dated 05.08.2024 and the consequent order dated 08.02.2025 raising a demand of Rs.2,87,95,167, alleging fraudulent availment of input tax credit. The proceedings formed part of a wider investigation into a network of non-existent firms that had raised goods-less invoices and passed on fraudulent credit of Rs.16,23,78,863 to 106 noticees for FY 2017-18; the petitioner featured at serial no.10, allegedly having received Rs.1,91,96,778 of such fraudulent credit. The petitioner also raised a limitation plea, pointing out that though the order was dated 01.02.2025/08.02.2025, the FORM DRC-07 summary was uploaded only on 08.02.2025, attributed by the department to a technical glitch.

Issues Involved

  1. Whether a writ court should adjudicate a large-scale, multi-noticee fraudulent input tax credit dispute involving disputed questions of fact, or relegate the assessee to the statutory appellate remedy.
  2. Whether the alleged delay between the date of the order and the date of upload of the DRC-07 summary can be examined in writ jurisdiction or should be raised in appeal.
  3. Whether clubbing input tax credit issues spanning multiple years (2017-18, 2018-19, 2020-21) into a single show cause notice for one assessment year alone vitiates the proceedings.

Petitioner's Arguments

  • Argued that the input tax credit in question pertained to multiple financial years, yet a single show cause notice and order had been issued only for AY 2017-18.
  • Raised a limitation plea, contending that the order was passed after the prescribed period and only later uploaded on the portal.

Respondent's Arguments

  • The Senior Standing Counsel for the GST Department submitted that the order was issued within the limitation period, and any later uploading on the portal was due to a technical glitch.
  • Emphasised the scale and gravity of the fraud — 106 noticees, non-existent firms, and goods-less invoices — as warranting detailed factual scrutiny unsuited to writ jurisdiction.

Court Order / Findings

  • The Court noted that the case involved allegations of fraudulent availment of ITC through non-existent firms and goods-less invoices spanning 106 noticees, involving substantial disputed facts.
  • Relying on the Supreme Court's ruling in The Assistant Commissioner of State Tax v. M/s Commercial Steel Limited, held that in the absence of a breach of fundamental rights, violation of natural justice, excess of jurisdiction, or a vires challenge, the petitioner ought to be relegated to its appellate remedy under Section 107 rather than have the writ court adjudicate disputed facts.
  • Held that the limitation plea, too, could be raised before the appellate authority along with supporting documents.
  • Directed that if the petitioner files an appeal with the mandatory pre-deposit by 30 September 2025, it shall not be dismissed as time-barred and shall be decided on merits, leaving all rights and contentions open.

Important Clarification

  • Cases of fraudulent input tax credit availment involving fake or non-existent suppliers and multiple noticees are treated as fact-intensive matters unsuited to writ jurisdiction, and are ordinarily relegated to the appellate authority under Section 107, per the Supreme Court's Commercial Steel Limited ruling.
  • Even where a writ petition is not entertained on merits, courts frequently protect the petitioner's limitation position for a subsequent statutory appeal, provided the pre-deposit and appeal are filed within the specified window.

Sections Involved

  • Section 74, CGST Act, 2017 (implicit basis of the fraud-based demand) – governs recovery of tax where credit has been fraudulently or wrongly availed.
  • Section 107, CGST Act, 2017 – the statutory appellate remedy to which the petitioner was relegated.
  • Section 16, CGST Act, 2017 – governs eligibility conditions for claiming input tax credit, central to the fraud allegation.

Decision – In Favour of

Disposed of in favour of the department procedurally — the writ was not entertained on merits and the petitioner was relegated to the appellate remedy, though with the limitation concession operating in the petitioner's favour if the appeal and pre-deposit are timely filed.

Case Details

  • Court: High Court of Delhi at New Delhi
  • Case No.: W.P.(C) 11094/2025 & CM APPL. 45644/2025
  • Coram: Hon'ble Justice Prathiba M. Singh and Hon'ble Justice Shail Jain
  • Date of Order: 11 August 2025

Link to Download the Order

Click here to view/download the full order

Disclaimer

This content is shared strictly for general information and knowledge purposes only. Readers should independently verify the information from reliable sources. It is not intended to provide legal, professional, or advisory guidance. The author and the organisation disclaim all liability arising from the use of this content. The material has been prepared with the assistance of AI tools.