High Court Declines Writ in Fake ITC Case, Directs Assessee to Statutory Appeal Route

The petitioner, proprietor of M/s Shri Shyam Trading Co., challenged an adjudication order dated 21 January 2025 raising GST demand on allegations of fraudulent availment of input tax credit through purchases from entities later found to be fake firms. The investigation originated from a DGGI probe against one Praveen Jain, who was alleged to have floated multiple non-existent firms for passing on fake ITC.

The petitioner filed a writ petition under Article 226 seeking quashing of the adjudication order, as no personal hearing was granted before passing the impugned order, and the show cause notice dated 23 July 2024 was uploaded on the GST portal beyond the period of limitation.

Issue Before HC: Whether the Delhi High Court should exercise writ jurisdiction under Article 226 to interfere with a GST adjudication order involving allegations of fraudulent availment of ITC, despite the availability of a statutory appellate remedy under Section 107 of the CGST Act.

HC’s Decision: The Delhi High Court declined to entertain the writ petition. It reiterated that cases involving allegations of fraudulent availment of input tax credit generally involve complex factual analysis and voluminous evidence, making them unsuitable for adjudication in writ jurisdiction.

The Court granted liberty to file a statutory appeal under Section 107 of the CGST Act. The appellate authority was directed not to dismiss the appeal on the ground of limitation if filed by the specified date, along with the mandatory pre-deposit, and to adjudicate the matter on merits.

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