Facts of the Case

The petitioner, Magicon Impex Pvt. Ltd., challenged an order dated 31st January 2025 passed by the Assistant Commissioner, CGST, Delhi West, raising a demand of Rs. 11,78,736/- concerning Input Tax Credit availed from M/s Shivoy Enterprises, whose GST registration was cancelled with effect from a date prior to the 192 invoices raised in its favour. The petitioner contended this order overlapped with an earlier order dated 7th January 2025 for the same Financial Year 2017-18, against which an appeal was already pending, while the Department maintained the earlier order concerned IGST and the present one concerned CGST/SGST, with no overlap.

Issues Involved

  1. Whether a writ petition should be entertained to examine an ITC demand order alleged to overlap with an earlier order already under appeal, in a case involving fraudulent availment of ITC.
  2. Whether the petitioner should be granted relief on limitation and pre-deposit given the reversal of a portion of the disputed ITC.

Petitioner's Arguments

  • The present demand overlapped with amounts already demanded in the earlier order dated 7th January 2025, for the same financial year.
  • Rs. 21,19,728/- of the disputed ITC had already been reversed, and the pre-deposit for filing the appeal against the impugned order should accordingly be waived.

Respondent's Arguments

  • There was no overlap between the two orders — the earlier order related to the IGST demand while the present order related to CGST and SGST demands.
  • Since the matter involved fraudulent availment of ITC and the order was appealable under Section 107, the petitioner should be relegated to that remedy, as this Court held in Mukesh Kumar Garg vs. Union of India.

Court Order / Findings

  • Following its consistent view that writ jurisdiction ought not ordinarily be exercised in ITC-fraud cases requiring factual analysis of complex transaction chains, the Court held the Petitioner Firm should avail its appellate remedy under Section 107.
  • Considering that an appeal against the earlier order dated 7th January 2025 had already been filed and that Rs. 21,19,728/- of ineligible ITC had already been reversed, the Court permitted the appeal against the impugned order to be filed manually within one month, along with an application for waiver of pre-deposit.
  • The Appellate Authority was directed to decide the pre-deposit waiver application on its merits, considering whether the reversal already made could be adjusted, and was directed not to dismiss the appeal on the ground of limitation if filed within that one-month window.

Important Clarification

  • Even where a writ court declines to examine an ITC-fraud demand on merits and relegates the assessee to the statutory appellate remedy, it can still grant targeted procedural relief — such as permitting manual filing beyond the ordinary limitation period and directing the Appellate Authority to specifically consider a pre-deposit waiver application in light of ITC already reversed.
  • A prior reversal of disputed ITC by the assessee is a relevant fact that the Appellate Authority must weigh while deciding a pre-deposit waiver plea, rather than mechanically insisting on fresh deposit.

Sections Involved

  • Section 16, CGST Act, 2017 – conditions for eligibility to avail Input Tax Credit, at the heart of the fraud allegation against the supplier chain.
  • Section 107, CGST Act, 2017 – statutory appellate remedy, including the pre-deposit requirement that was the subject of the waiver plea.

Decision – In Favour of

Disposed of with directions, in part in favour of the Assessee — the writ challenge was declined, but manual appeal filing beyond limitation and a merits-based pre-deposit waiver consideration were granted.

Case Details

  • Court: High Court of Delhi at New Delhi
  • Case No.: W.P.(C) 9893/2025
  • Coram: Justice Prathiba M. Singh and Justice Rajneesh Kumar Gupta
  • Date of Order: 15 July 2025

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