Facts of the Case

The present writ petition was filed under Article 226 of the Constitution of India challenging the Order-in-Original dated 27 January 2025, whereby a demand of ₹1,14,114 along with penalty was raised against the Petitioner.

The case arose from an investigation conducted by the CGST Department into multiple firms allegedly involved in fraudulent availment of Input Tax Credit (ITC) through issuance of goods-less invoices. It was revealed that several supplier firms were non-existent and were created solely to pass on fake ITC without actual supply of goods.

The Petitioner’s firm, M/s Aura Interior Hardware, was identified as one of the entities involved in the chain of transactions and was accordingly subjected to tax demand and penalty. 

Issues Involved

  1. Whether the writ petition is maintainable in cases involving fraudulent availment of ITC.
  2. Whether principles of natural justice were violated due to alleged non-service of show cause notice and absence of personal hearing.
  3. Whether the impugned order was barred by limitation.
  4. Whether the Petitioner can bypass the statutory appellate remedy under the CGST Act. 

Petitioner’s Arguments

  • The Petitioner contended that no Show Cause Notice was issued and no personal hearing was granted.
  • It was argued that proceedings for certain financial years were not properly initiated.
  • The Petitioner further claimed that the impugned order was passed beyond the limitation period.
  • The challenge was made directly before the High Court instead of availing the appellate remedy.

Respondent’s Arguments

  • The Department submitted that proper opportunities of personal hearing were granted on multiple dates.
  • It was argued that the Petitioner failed to appear and the order was rightly passed ex parte based on available records.
  • The Department established that fake ITC was availed through non-existent supplier firms issuing invoices without actual supply.
  • It was further contended that the impugned order is appealable under Section 107 of the CGST Act and the writ petition is not maintainable.

Court’s Findings / Order

The Delhi High Court held:

  • The allegation of non-service of notice and lack of hearing was incorrect as multiple opportunities were granted.
  • The impugned order clearly covered the relevant period and was passed within the limitation period.
  • The case involved serious allegations of fraudulent ITC through fake firms and invoices.
  • The writ jurisdiction under Article 226 should not be exercised in such matters involving disputed facts and fraud.
  • The Court relied on Mukesh Kumar Garg vs. Union of India & Ors. holding that writ jurisdiction should not be used in fraudulent ITC cases. 

Important Clarification by Court

  • Writ jurisdiction is not appropriate in cases involving fraudulent ITC and complex factual disputes.
  • The CGST appellate mechanism must be exhausted before invoking writ jurisdiction.
  • Fraudulent ITC practices pose a serious threat to the GST regime and public revenue.
  • Courts will not entertain petitions from litigants attempting to bypass statutory remedies or delay proceedings.

Sections / Provisions Involved

  • Article 226 of the Constitution of India
  • Section 16, CGST Act (Input Tax Credit)
  • Section 107, CGST Act (Appeal)
  • Section 122(1) & 122(3), CGST Act (Penalties)

Link to download the order -  https://delhihighcourt.nic.in/app/showFileJudgment/PMS10072025CW95242025_172100.pdf 

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.