GST | Delhi HC Rebukes Trend Of Persons Who Wrongfully Avail ITC By Invoking Writ Jurisdiction; Imposes ₹1 Lakh Cost

The Delhi High Court has criticized the “pattern” of persons, who either availed fraudulent Input Tax Credit or enabled the availment of fraudulent ITC, invoking Court's writ jurisdiction to challenge orders imposing penalty under Section 74 of the Central Goods and Services Act 2017, on technical grounds.A division bench of Justices Prathiba M. Singh and Rajneesh Kumar Gupta further observed,“This Court also takes note, with some consternation, that such large scale fraudulent availment of ITC without actual passing of goods or services may, if left unchecked, can lead to severe damage to the GST framework itself, which is meant to encourage legally entitled persons and businesses to avail of ITC and other similar facilities such as drawbacks etc.”It thus proceeded to impose a cost of ₹1 lakh on one such firm which allegedly raised invoices against fake firms to avail the benefit of ITC and then approached the High Court against penalty proceedings initiated by the GST Department.The Petitioner Firm contended that though reply to the show cause notice was filed by it, however, the same was not considered and no personal hearing was given prior to passing of the impugned order raising demand.The Respondent on the other hand submitted that three hearing notices were issued to the Petitioner Firm, however, the said hearings were not attended by the Petitioner Firm. In addition, it submitted that prior to passing of the impugned order, the concerned authority had verified from the portal that no reply had been uploaded by the Petitioner firm.Hearing this, the Court observed, “so long as there is no violation of natural justice or jurisdictional error, writ jurisdiction ought not to be exercised, especially if the Petitioner has not come with clean hands. In the present case there is no infraction, as the show cause notice was duly issued to the Petitioner Firm and the personal hearing notices have also been provided. There is also no arbitrary exercise of power by the Department, which would require exercising of writ jurisdiction.”It thus proceeded to dismiss the petition with ₹1 lakh costs payable to the Delhi High Court Bar Association within two weeks.Appearance: Mr. N.K. Sharma and Mr. Kapil Gautam, Advocates for Petitioner; Ms. Neha Rastogi, SPC with Mr. Animesh Rastogi, Mr. Vibhav Singh, Mr. Shashank Pandey and Mr. Rajat Dubey, Advocates for R-1. Mr. Akash Verma, Sr. SC, CBIC with Ms. Aanchal Uppal, Advocate.Case title: M/S Mahesh Fabrinox Pvt. Ltd v. Union of IndiaCitation: 2025 LiveLaw (Del) 536Case no.: W.P.(C) 6006/2025Click here to read order

GST | Delhi HC Rebukes Trend Of Persons Who Wrongfully Avail ITC By Invoking Writ Jurisdiction; Imposes ₹1 Lakh Cost

Kapil Dhyani

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