Facts of the Case

VSA Trading Pvt Ltd challenged an Order-in-Original dated 21 January 2025 raising a demand of Rs.34,47,419/- against it, arising out of a large-scale investigation into fraudulent availment of Input Tax Credit. The investigation found that 79 non-existent/fake firms had transferred fraudulently generated ITC exceeding Rs.122 crore to 1155 recipient taxpayers, of whom the petitioner was one (at serial number 68 of the impugned order).

Issues Involved

  1. Whether a demand arising from a complex, multi-party fraudulent ITC racket, involving disputed questions of fact, can be adjudicated in writ jurisdiction under Article 226.

Petitioner's Arguments

  • No proper hearing was afforded before passing the impugned order, amounting to a violation of natural justice.
  • A typographical error in the notice mentioned the reply due date as 28 August 2025 instead of 28 August 2024.

Respondent's Arguments

  • The petitioner was aware of the notices, and even in its reply had raised only the ground that relied-upon documents were not supplied, without addressing the merits; no reply was in fact ever filed to the substantive allegations.

Court Order / Findings

  • Following its consistent line of authority (Assistant Commissioner of State Tax v. Commercial Steel Ltd. (SC); Mukesh Kumar Garg v. Union of India; Sheetal and Sons v. Union of India; M/s MHJ Metal Techs v. CGST Delhi South; and its own order in Toshniwal Electricals Pvt Ltd. concerning the very same impugned order), the Court held that cases involving fraudulent availment of ITC through non-existent firms raise complex factual questions requiring detailed investigation and evidence appreciation, which are unsuited to writ jurisdiction.
  • The typographical error in the due date could not be taken advantage of, especially as no reply had ever been filed by the petitioner.
  • The petitioner was relegated to the statutory appellate remedy under Section 107 of the CGST Act, to be filed by 15 January 2026 along with the requisite pre-deposit, with a direction that the appeal shall be heard on merits and not dismissed on the ground of limitation.
  • The CGST Department was separately advised to exercise greater caution regarding errors in financial years and due dates in its notices and orders.

Important Clarification

  • Delhi High Court has developed a settled practice of declining writ jurisdiction in cases involving allegations of fraudulent ITC availment through fake/non-existent firms, given the complex factual maze involved, and instead relegating noticees to the statutory appeal under Section 107 with protection against limitation.

Sections Involved

  • Section 16, CGST Act, 2017 – conditions for availment of Input Tax Credit.
  • Section 107, CGST Act, 2017 – statutory appeal remedy.
  • Section 122, CGST Act, 2017 – penalty for certain offences.

Decision – In Favour of

Disposed of in favour of the Department to the extent that the writ petition is not entertained on merits; the petitioner is granted liberty to pursue the statutory appeal without a limitation bar.

Case Details

  • Court: High Court of Delhi at New Delhi
  • Case No.: W.P.(C) 18128/2025
  • Coram: Hon'ble Justice Prathiba M. Singh and Hon'ble Justice Renu Bhatnagar
  • Date of Decision: 1 December 2025

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