The Delhi High Court has refused to interfere with GST demand orders totalling over Rs. 1.02 crore issued against Sugan Traders, alleged to have availed and passed on fraudulent Input Tax Credit (ITC) in connection with a large fake invoice racket. Instead, the Court directed the petitioner to pursue the statutory appellate remedy under Section 107 of the Central Goods and Services Tax (CGST) Act.
The Bench of Justice Prathiba M. Singh and Justice Shail Jain was hearing a petition challenging two adjudication orders dated February 3 and 9, 2025, raising demands of Rs. 69.42 lakh and Rs. 1.21 crore respectively against the petitioner.
The petitioner argued that the reply dated August 30, 2024, to two Show Cause Notices (SCNs) issued on August 5, 2024, was not considered by the adjudicating authority. The petitioner had attended the personal hearing, but this was not reflected in the orders. The orders were uploaded on the GST portal on February 9, 2025, allegedly beyond the limitation period. As per Circular No. 31/05/2018-GST, similar SCNs within a financial year should have been disposed of through a single order.
The GST Department contended that the orders were passed within the limitation period, but due to a technical glitch, their uploading on the portal occurred later. The Department also noted that in large-scale ITC fraud cases involving multiple networks, consolidated SCNs were impractical.
The case is part of a wider investigation alleging that non-existent firms issued goods-less invoices to pass on fraudulent ITC worth ₹8.83 crore to 176 entities during FY 2017–18. Sugan Traders was placed at Serial No. 117 in the noticee list. Alleged fraudulent ITC passed on: ₹21,06,027 under the first SCN and ₹80,99,712 under the second SCN.
The SCNs also referred to two individuals, Rajesh Jindal and Adesh Jain, alleged to have created and controlled a network of fake firms.
The Bench stressed that writ jurisdiction under Article 226 should not be invoked when an alternative statutory remedy exists, except in exceptional cases involving breach of fundamental rights, violation of natural justice, jurisdictional error, or challenge to statute vires.
Referring to Supreme Court’s ruling in Assistant Commissioner of State Tax v. Commercial Steel Limited (2021) and its own earlier decision in M/s Sheetal and Sons v. Union of India, the Court held that disputed factual issues—such as whether replies were considered and ITC fraud allegations—must be examined by the appellate authority.
On the petitioner’s claim regarding the 2018 circular, the Court found that the SCNs pertained to separate fraudulent networks and could not have been consolidated.
The Court disposed of the petition, granting liberty to the petitioner to file an appeal along with the requisite pre-deposit by September 30, 2025. It also directed that if the appeal is filed within this time, it will not be dismissed on limitation grounds and must be decided on merits.
Case Details
Case Title: Shri Sugan Traders Versus Commissioner Of Central Goods And Services Tax
Case No.: W.P.(C) 11091/2025 & CM APPL. 45639/2025
Date: 11th August, 2025
Counsel For Petitioner: Rakesh Kumar
Counsel For Respondent: Harpreet Singh
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Mariya is the Senior Editor at Juris Hour. She has 5+ years of experience on covering tax litigation stories from the Supreme Court, High Courts and various tribunals including CESTAT, ITAT, NCLAT, NCLT, etc. Mariya graduated from MLSU Law College, Udaipur (Raj.) with B.A.LL.B. and also holds an LL.M. She started as a freelance tax reporter in the leading online legal news companies like LiveLaw & Taxscan.
