HC Gives Relief to Company in Rs. 1.33 Crore ITC Fraud Case, Allows Time-Barred Appeal:

HC Gives Relief to Company in Rs. 1.33 Crore ITC Fraud Case, Allows Time-Barred Appeal The case was filed by a company named Samarth Traders in the Delhi High Court under Article 226 of the Constitution of India, challenging an order dated January 21, 2025, passed by the Office of Assistant Commissioner of Central Tax Division - Old Delhi, Commissionerate CGST Delhi North. The order confirmed the demand of Rs. 1.33 crore for wrongly claiming ITC (Input Tax Credit) based on invoices issued by three firms that were found to be fake. During the investigation, the officials of the Directorate General of Goods and Service Tax Intelligence (DGGI) conducted a search operation at the resident location of the owner of M/s Ramesh & Co. The investigation concluded that the companies, M/s Ramesh & Co., M/s Shiv Traders and M/s Laxmi Trading Co., have passed on fraudulent ITC without actual transfer of goods and services. Among all these parties, the petitioner was also included.

Also Read

High Court: GST Appeal Cannot Be Reserved & Delivered Later Without Notice; Order Quashed

The investigation by DGGI suggested that Samarth Traders had used these fake invoices to take ITC and avoid paying GST in cash. Because of this, the department raised a tax demand, added interest, and imposed an equal penalty. They also attached the bank accounts of Samarth Traders and adjusted the money against the demand. An additional penalty of Rs. 50,000 was imposed on the proprietor. The department issued a show cause notice (SCN) to the Samarth Traders on July 31, 2023. The company replied to the notice on November 23, 2023. However, the department did not accept the reply of the company and issued the final order stating that the company did not cooperate during the investigation, like they did not respond to summons and did not even appear at the scheduled personal hearings, except once in 2022. However, on this, the company argued that they were not given a proper chance of a personal hearing after filing their reply.

Also Read

Delhi HC Slams GST Dept for Ex-Parte Order, Reopens SCN, Imposes 25k Cost on petitioner

The High Court did not go into the full merits of the case. Instead, it directed Samarth Traders to file a statutory appeal under Section 107 of the GST Act. The Court also granted relief by saying that if the appeal is filed by December 15, 2025, along with the required pre-deposit, it should not be dismissed for being late and must be decided on the merits. With these directions, the High Court closed the writ petition.