Delhi High Court Refuses to Quash GST Demand in ITC Fraud Case, Directs Petitioner to Avail Appellate Remedy

The company, Shri Sugan Traders, through its proprietor Abhishek Bindal, received two GST demand orders, one dated 03.02.2025 demanding Rs. 6,942,504 and another dated 09.02.2025 demanding Rs 1,21,49,568. These orders accused the petitioner company of being involved in fraudulently claiming Input Tax Credit (ITC) by using fake invoices from non-existent companies. Therefore, the petitioner filed a writ petition before the Delhi High Court to cancel these demand orders.

The learned counsel of the petitioner submitted that the company received two show cause notices before passing the impugned orders. The petitioner also replied to this SCN, but the petitioner claims that the GST department had ignored this reply while passing the final orders. Further, the counsel also argues that they attended the personal hearing, but this was not mentioned in the impugned order. The counsel also raised arguments regarding the limitation period of the orders.

On the other hand, the learned Sr. Standing Counsel, appearing for the GST Department, submits that the orders were issued within the specified time, but because of some technical error, they might have been uploaded later.

The bench, comprising Justice Prathiba M. Singh and Justice Shail Jain, observed that the present matter involved the fraudulent availment of ITC, having many factual issues, which need to be analysed, and this cannot be adjudicated in a writ petition. The court suggested that the petitioner must have filed an appeal before the appellate authority instead of filing a writ petition before the Delhi High Court. The court also referred to an earlier judgement involving the same issues, which concluded that the petitioner must avail the appellate remedy.

Therefore, the court refused to interfere in this matter and did not allow the petition. The court directed the petitioner to avail the appellate remedy by September 30, 2025, along with the requisite pre-deposit. The court also stated that if the petitioner pays this amount before the given time, the appeal shall not be dismissed for being late.