Facts of the Case

Amit Aggarwal, former director of M/s Incline Overseas Private Limited (since struck off), challenged an adjudication order dated 03.02.2025 raising a demand of Rs. 1,21,50,000 against him under the CGST Act, 2017, arising from a Show Cause Notice dated 01.08.2024 alleging that M/s Citi Impex had availed and passed on Input Tax Credit exceeding Rs. 32 crore on the strength of bogus invoices, with the petitioner's firm as one of the recipients. Before the Delhi High Court, the petitioner contended that the wrong financial year (2017-18 instead of 2018-19) was mentioned in the summary order in Form DRC-07, and that his firm was not even in existence at the relevant time. The revenue conceded the year in DRC-06 was correct and that DRC-07 carried only a typographical error curable under Section 161. The Division Bench decided the matter on 15.07.2025.

Issues Involved

  1. Whether a writ petition should be entertained to challenge an appealable adjudication order in a case involving alleged fraudulent availment of ITC through a chain of non-existent firms.
  2. Whether a typographical error regarding the financial year in Form DRC-07 justifies interference under Article 226.
  3. Whether the petitioner should be permitted to file a belated statutory appeal after rectification of the error.

Petitioner's Arguments

  • The DRC-07 summary order incorrectly mentioned Financial Year 2017-18 instead of 2018-19, rendering the demand internally inconsistent and legally infirm.
  • The petitioner's firm was not even in existence during the period covered by the demand, so the allegation of availing ITC from M/s Citi Impex could not be sustained against it.

Respondent's Arguments

  • The correct financial year, 2018-19, was in fact recorded in the earlier DRC-06 intimation, and the discrepancy in DRC-07 was a mere typographical error.
  • Any such error is curable by the Adjudicating Authority itself under Section 161 of the CGST Act, and does not warrant setting aside the substantive demand.
  • Relying on Mukesh Kumar Garg vs. Union of India, it was submitted that writ jurisdiction ought not ordinarily be exercised in cases involving fraudulent ITC availed through non-existent firms, since such matters require detailed factual adjudication best undertaken by the Appellate Authority.

Court Order / Findings

  • The Court held that since the matter concerned fraudulent availment of ITC and the impugned order was appealable, the petitioner ought to avail of the statutory appellate remedy rather than invoke writ jurisdiction, following the ratio in Mukesh Kumar Garg that writ courts should not adjudicate the complex factual maze of ITC fraud through non-existent firms.
  • A mere typographical or inadvertent error in DRC-07 was held not to be sufficient reason to entertain a writ petition; the petitioner was relegated to the appellate authority.
  • The Court directed that DRC-07 be rectified to reflect FY 2018-19 within one week, after which the petitioner was to file an appeal with pre-deposit within 30 days.
  • Though the original limitation period for appeal had already expired, the Court directed that an appeal filed within this fresh window, along with pre-deposit, shall be adjudicated on merits and not dismissed on the ground of limitation.

Important Clarification

  • Writ courts will ordinarily decline to interfere in cases involving alleged fraudulent availment of ITC through a chain of non-existent or bogus firms, relegating such fact-intensive disputes to the statutory appellate forum.
  • A mere clerical error in the DRC-07 summary (as distinct from the underlying SCN or DRC-06) is not, by itself, a ground to quash an otherwise appealable demand, since Section 161 permits administrative rectification of such errors.
  • Even while declining interference, courts may still grant equitable relief by extending the limitation for filing a statutory appeal once the underlying clerical defect is cured.

Sections Involved

  • Section 16, CGST Act, 2017 - governs eligibility and conditions for claiming input tax credit, at the heart of allegations of fraudulent ITC availment.
  • Section 107, CGST Act, 2017 - prescribes the appellate remedy against an adjudication order, including the pre-deposit requirement.
  • Section 122, CGST Act, 2017 - penalty provisions for offences including fraudulent availment of ITC.
  • Section 161, CGST Act, 2017 - empowers rectification of errors apparent on the face of the record in any decision, order, notice or certificate.

Decision - In Favour of

Disposed of with directions; not decided on merits. The Court declined to interfere with the demand and relegated the petitioner to the department, granting only the limited procedural relief of DRC-07 rectification and a fresh, non-limitation-barred window to file a statutory appeal with pre-deposit.

Case Details

Court: High Court of Delhi at New Delhi
Case No.: W.P.(C) 8340/2025 and CM APPL. 36174/2025
Coram: Hon'ble Justice Prathiba M. Singh and Hon'ble Justice Rajneesh Kumar Gupta
Date of Decision: 15.07.2025

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