Pursue Statutory Appeal in Alleged Fake GST ITC Case: Delhi High Court

The Delhi High Court has declined to entertain a writ petition challenging a GST adjudication order involving allegations of fraudulent availment of Input Tax Credit (ITC), holding that the assessee must first exhaust the statutory appellate remedy under the Central Goods and Services Tax (CGST) Act, 2017. The bench of Justice Prathiba M. Singh and Justice Shail Jain however, granted limited relief by protecting the assessee from dismissal of the appeal on the ground of limitation, subject to compliance with pre-deposit requirements The petition was filed under Articles 226 and 227 of the Constitution challenging an order dated 14 February 2025 passed by the Joint Commissioner of Central Tax, raising demands on the allegation that ITC had been fraudulently availed through a network of fake firms issuing invoices without actual supply of goods or services. The case arose out of an investigation by the Directorate General of GST Intelligence (DGGI), which uncovered a racket allegedly operating across multiple cities and involving several entities According to the records placed before the Court, the investigation revealed that a key individual was running multiple fake firms for issuance of invoices, which were then used by beneficiary entities to claim ITC. The petitioner was alleged to be part of this chain, having claimed to avail manpower services from one such fake firm. Based on these findings, the tax authorities issued a show cause notice and subsequently passed the impugned adjudication order raising tax, interest, and penalty demands Before the High Court, two principal objections were raised. First, it was argued that considering the quantum involved, the show cause notice could not have been issued by a Superintendent of DGGI and ought to have been issued only by an officer of the rank of Joint Director. Second, it was contended that there was ambiguity regarding appellate jurisdiction, as proceedings appeared to have taken place across both Delhi and Faridabad, creating uncertainty about where the statutory appeal should be filed On the first issue, the department clarified that although the show cause notice appeared on the GST portal under the name of a Superintendent, it had in fact been duly signed and approved by the competent Joint Director of DGGI. The Court accepted this explanation, noting that the substance of authorization, rather than the portal reflection, was determinative With respect to appellate jurisdiction, the Court examined recent CBIC Circular No. 250/07/2025-GST dated 24 June 2025, read with Notification No. 02/2017-Central Tax. It held that appeals against orders passed by a Common Adjudicating Authority, such as an Additional or Joint Commissioner empowered with all-India jurisdiction in DGGI cases, would lie before the Commissioner (Appeals) corresponding to the territorial jurisdiction under which such authority is posted. On facts, the Court found that the adjudication had effectively been carried out at Faridabad and that the Commissioner (Appeals), Gurugram, would be the correct appellate authority. The Bench further observed that in cases involving multiple notices spread across different jurisdictions, adjudication by a single empowered authority is contemplated under the GST framework, with jurisdiction being determined based on the highest tax demand involved. The uploading of the summary order in Form DRC-07 by a different commissionerate was held to be a procedural consequence and not a factor altering appellate jurisdiction Rejecting the petitioner’s challenge at the writ stage, the High Court held that none of the objections warranted bypassing the statutory appellate mechanism, especially in a case involving serious allegations of fraudulent ITC. The Court clarified that all contentions raised by the assessee were open to be urged before the appellate authority on merits. In a significant relief, the Court directed that if the appeal is filed on or before 31 January 2026 along with the prescribed pre-deposit, it shall not be dismissed on the ground of limitation and must be adjudicated on merits. With these observations, the writ petition and pending applications were disposed of. Case Details Case Title: Manikjeet Singh Kals Versus UOI Case No.: W.P.(C) 4682/2025 & CM APPL. 21614/2025 Date: 15/12/2025 Counsel For Petitioner: Vineet Chadha, Adv. Counsel For Respondent: Monika Benjamin SSC Click Here To Read Order Read More: Rajasthan HC Scraps GST Levy on Royalty, Orders Fresh Review Under SC’s MADA Ruling

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