Fraudulent CENVAT Credit Allegations Involving Complex Facts Not Fit For Writ Jurisdiction: Delhi High Court

The Delhi High Court has held that the precedents barring invocation of writ jurisdiction in cases involving complex GST/ ITC transactions equally apply to cases of fraudulent CENVAT Credit.A division bench of Justices Prathiba M. Singh and Renu Bhatnagar observed,“This Court has consistently taken the view that in cases involving fraudulent availment of ITC, ordinarily, the Court would not be inclined to exercise its writ jurisdiction…In such cases, it would be necessary to consider the burden on the exchequer as also the nature of impact on the GST regime, and balance the same against the interest of the Petitioners, which is secured by availing the right to statutory appeal. In the opinion of this Court, the same shall be applicable to cases of CENVAT Credit.”The Court was dealing with a trader's plea challenging ₹1.63 crore penalty imposed for facilitating availment of ineligible CENVAT Credit by raising fraudulent invoices.As per facts, a show cause notice was sent to the Petitioner in response to which, he wrote two emails merely seeking copies of the Relied Upon Documents. However, no reply on merits was filed by the Petitioner. The Petitioner also did not file any retraction of his statement admitting that he had issued only invoices without supply of goods.Consequently, the impugned demand order was passed.The Petitioner contended that the demand was raised without supplying him the RUDs.The High Court however noted that no reply was filed by the Petitioner before the Adjudicating Authority. “The Petitioner was fully aware of the SCN which was issued to him. Not even an iota of attempt was made by the Petitioner to rebut or explain the allegations against the Petitioner,” it said.The Court further noted that the Petitioner's statement stood un-retracted till date, which would show that there was a clear admission to the role played by him.“The Petitioner ought to have appeared and participated in the adjudication proceedings which the Petitioner has miserably failed to do and considering the view of this Court in the case of similar credit such as Input Tax Credit (hereinafter, 'ITC') where there are a maze of transactions and goods-less invoices are raised by parties, the opinion of this Court has been that writ jurisdiction ought not to be exercised ordinarily,” the Court said and dismissed the plea.Appearance: Mr. Akshat Vachher & Mr. Shrey Lodha, Advs. for Petitioner; Mr. Anushree Narain, SSC with Mr. Naman Choula, Adv. for RespondentCase title: Navneet Bansal v. Additional Commissioner CGST Delhi NorthCase no.: W.P.(C) 4723/2025Click here to read order

Fraudulent CENVAT Credit Allegations Involving Complex Facts Not Fit For Writ Jurisdiction: Delhi High Court

Kapil Dhyani

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