Trader's Plea To Cancel GST Registration Unravels ITC Fraud, Delhi High Court Imposes ₹5 Lakh Costs Over Misleading Submissions

In an unusual turn of events at the Delhi High Court, an “innocuous” petition filed by a trader seeking cancellation of its GST registration unravelled fraudulent availment of Input Tax Credit worth lakhs.A division bench of Justices Prathiba M. Singh and Shail Jain thus imposed a cost of ₹5 lakh on the trader, ₹2 lakh of which would go to the Delhi High Court Bar Association, ₹2 lakh to the GST Department and remaining ₹1 lakh to the Sales Tax Bar Association.“Severe action is liable to be taken against the Petitioner,” the judges further exhorted the Department.Succinctly put, Petitioner was aggrieved by GST Department's delay in cancelling its registration.The Department however informed the Court that Petitioner had a substantial turnover of more than Rs.7 crores in six to seven months and had not paid any GST in cash in the matter. It further submitted that upon a field visit report, it was found that the Petitioner does not exist at the given address.Petitioner's proprietor however disputed this claim and handed over a short video to the Court, wherein the landlord claimed that the said shop was given out on rent to the Petitioner and no inspection, as claimed, was done by the GST Inspector.However, when faced with Court's queries, the proprietor, appearing in person, admitted that he had got the board installed only a day prior to the hearing (in October), whereas he had vacated the premises back in July. “Clearly, the board has been installed only for the purposes of the video and the Petitioner obviously is not doing business at the said premises…The Petitioner has completely misled the Court about the nature of his business. The entire attempt appears to have been to somehow escape the further legal action by the Department in respect of ITC which is stated to have been availed of from fraudulent entities,” said the Court.Adding that such conduct cannot be condoned by the Court, it refused to entertain the plea and dismissed it with costs.Appearance: Mr. Pranay Jain, Adv. for Petitioner; Mr. Sumit K. Batra, Adv. for RespondentCase title: M/S Shiva Enterprises v. Principal Commissioner, Department Of Trade And Taxes, GNCTDCitation: 2025 LiveLaw (Del) 1498Case no.: W.P.(C) 13977/2025Click here to read order

Trader's Plea To Cancel GST Registration Unravels ITC Fraud, Delhi High Court Imposes ₹5 Lakh Costs Over Misleading Submissions

Kapil Dhyani

Tags