Facts of the Case

The petitioner, M/s V K Enterprises, was issued a show-cause notice dated 2nd August 2024 alleging that one M/s Nirvan Enterprises was a non-existent firm which had fraudulently passed on ineligible Input Tax Credit (ITC) to the petitioner. The petitioner replied to the SCN on 23rd October 2024. The Order-in-Original dated 2nd February 2025 confirmed a demand of Rs.3,07,444/- on a taxable value of Rs.17,08,020/-. The petitioner contended that its reply had not been considered and that the hearing notice was received only after the date of hearing had already passed. The department countered that three separate hearing dates had been afforded, on none of which the petitioner appeared. The petitioner approached the Delhi High Court under Article 226 against the confirmed demand.

Issues Involved

  1. Whether the Order-in-Original was vitiated for want of consideration of the petitioner's reply and for denial of an effective opportunity of hearing.
  2. Whether the writ court should examine the merits of the alleged fraudulent ITC availment or relegate the petitioner to the statutory appellate remedy.

Petitioner's Arguments

  • The reply filed on 23rd October 2024 was never considered by the Adjudicating Authority, and this is not reflected anywhere in the impugned order.
  • The notice for personal hearing was received only after the scheduled date of hearing had already passed, denying an effective opportunity to be heard.

Respondent's Arguments

  • Three dates of hearing were given to the petitioner, but the petitioner did not appear or argue the matter on any of them.

Court Order / Findings

  • On perusing the petitioner's reply, the Court noted that it contained no details of M/s Nirvan Enterprises -- no averment that the firm existed, who its promoters were, or its contact details -- despite the very allegation being that ITC was passed on by a non-existent firm.
  • Basic corroborative facts of this kind ought to have been furnished in the reply, especially in a case alleging fraudulent availment of ITC through a non-existent supplier.
  • Since the impugned order was appealable under Section 107 of the CGST Act, the petitioner was relegated to the appellate remedy; if filed within one month, the appeal would not be dismissed on limitation and would be heard on merits.
  • The petitioner was permitted to file an additional affidavit giving further details of M/s Nirvan Enterprises before the Appellate Authority, and the appeal was directed to be filed along with the requisite pre-deposit.

Important Clarification

  • A reply to a fraudulent-ITC show-cause notice that omits basic corroborative details of the allegedly non-existent supplier -- its existence, promoters, contact particulars -- will not by itself demonstrate a denial of natural justice, and writ relief is unlikely to be granted on that footing alone.
  • Where an Order-in-Original is appealable under Section 107, courts will ordinarily relegate the assessee to that remedy rather than examine disputed facts about a supplier's genuineness in writ jurisdiction.

Sections Involved

  • Section 107, CGST Act, 2017 -- appeal to the Appellate Authority against orders of the proper officer, including the requirement of pre-deposit.
  • Input Tax Credit (ITC) provisions of the CGST Act, 2017 -- concerning credit passed on by allegedly non-existent suppliers.

Decision – In Favour of

Disposed of with directions; not a finding on merits either way -- the petitioner was relegated to the statutory appeal under Section 107 with protection against limitation.

Case Details

High Court of Delhi at New Delhi; W.P.(C) 5320/2025 & CM APPL. 24237/2025; Coram: Justice Prathiba M. Singh and Justice Rajneesh Kumar Gupta; Order dated 09.07.2025.

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