Facts of the Case

The Petitioner, registered under the VAT regime as M/s Samyak International, was later allotted a provisional GST registration upon the introduction of GST. The Petitioner contended that such registration was not sought by him and that he had already ceased business operations in July 2017.

Subsequently, a demand exceeding ₹48 crores was raised against him on allegations of fraudulent availment and passing of Input Tax Credit (ITC). The Department’s findings indicated that the firm had engaged in large-scale transactions involving multiple entities, resulting in ineligible ITC claims and transfers.

The Petitioner denied involvement in these transactions and claimed that his GST registration number had been misused. He submitted that he had lodged a police complaint and cooperated with the GST authorities.

Issues Involved

  1. Whether a writ petition under Article 226 is maintainable in cases involving disputed facts and allegations of fraudulent ITC.
  2. Whether the Petitioner should be relegated to the statutory appellate remedy under the CGST Act.
  3. Whether misuse of GST registration can be adjudicated in writ jurisdiction. 

Petitioner’s Arguments

  • The GST registration allotted in the name of M/s Samyak International was not applied for by the Petitioner.
  • The business had already been closed prior to GST implementation.
  • The alleged transactions were conducted without his knowledge, and the GST number was misused.
  • The Petitioner had already filed a police complaint, and therefore, liability should not be fastened upon him.

Respondent’s Arguments

  • The Department identified a complex network of transactions involving fraudulent ITC availment and passing to multiple entities.
  • The firm was found to be a fake entity used for wrongful ITC claims.
  • Detailed investigation revealed substantial financial implications affecting the GST regime.
  • The impugned order was passed after proper adjudication and is appealable under the statutory framework.

Court Findings / Order

  • The Court held that cases involving fraudulent ITC require detailed factual examination, which cannot be undertaken in writ jurisdiction.
  • It reiterated that writ jurisdiction under Article 226 should be exercised sparingly, especially in tax matters involving complex facts.
  • The Court emphasized that an effective alternative remedy exists under Section 107 of the CGST Act, 2017, which provides for an appeal against adjudication orders.
  • The Petitioner was granted liberty to file an appeal within one month, despite the limitation period having expired.
  • It was directed that if such appeal is filed, it shall be adjudicated on merits and not dismissed on limitation grounds.
  • Additionally, the Economic Offences Wing (EOW) was directed to file a status report to ensure proper investigation.

Important Clarification by Court

  • Fraudulent ITC cases involve serious implications on the GST framework and public revenue.
  • Writ jurisdiction cannot be used to bypass statutory remedies.
  • Factual disputes, including misuse of identity or registration, must be examined by appellate authorities.
  • Parallel proceedings in different forums should be avoided to prevent conflicting decisions.

Sections Involved

  • Article 226, Constitution of India
  • Section 16, CGST Act, 2017 – Input Tax Credit
  • Section 107, CGST Act, 2017 – Appeals
  • Section 122(1) & 122(3), CGST Act, 2017 – Penalties (referred in precedent discussion)

Link to download the order -  https://delhihighcourt.nic.in/app/showFileJudgment/PMS07072025CW91392025_153111.pdf 

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