Can’t Entertain Writs In Fake ITC Case: Delhi High Court

The Delhi High Court has refused to entertain a batch of writ petitions challenging a GST adjudication order alleging large-scale fraudulent availment of Input Tax Credit (ITC), holding that the disputes involving complex facts and serious allegations should ordinarily be examined by the statutory appellate authority rather than under writ jurisdiction. The Bench of Justice Prathiba M. Singh and Justice Shail Jain was hearing petitions filed by three assessees against an order dated January 29, 2025, passed by the Assistant Commissioner (Adjudication), CGST, Delhi North, pursuant to a show cause notice issued in May 2024. The dispute arose from a report generated by the Directorate General of Analytics and Risk Management (DGARM) during verification of a proprietary firm, M/s Paramount Enterprises. Data analysis allegedly revealed a web of transactions involving multiple firms, many of which were found to be non-existent. According to the Department, these entities were used to issue invoices without actual supply of goods, enabling recipients to fraudulently avail ITC. The investigation alleged that the petitioners had unlawfully availed ITC amounting to over Rs. 18.24 crore from such non-existent firms. Statements recorded during the inquiry suggested that no goods were physically supplied against the invoices and that the transactions were structured solely to pass on ITC. One of the statements was later retracted by the concerned petitioner. The petitioners primarily contended that the adjudication order was vitiated due to violation of principles of natural justice, as no personal hearing was granted before passing the order. While the impugned order recorded that multiple personal hearing opportunities had been provided, the Department was unable to produce documentary proof of dispatch of hearing notices. The petitioners argued that absence of proof of service of personal hearing notices went to the root of the matter and warranted quashing of the adjudication order. The Court noted that the show cause notice had admittedly been served and replies had been filed by the petitioners. It observed that the replies were vague and did not meaningfully address the serious allegations regarding the nature of goods or the genuineness of transactions. The Bench held that merely because the Department could not trace proof of dispatch of personal hearing notices, the Court could not disbelieve the adjudication authority’s record stating that hearings were granted. It further observed that, overall, the principles of natural justice appeared to have been complied with in the facts of the case. Relying on a series of Supreme Court and Delhi High Court precedents, including Assistant Commissioner of State Tax v. Commercial Steel Ltd., the Court reiterated that writ jurisdiction under Article 226 should not be routinely exercised in cases involving alleged fraudulent availment of ITC. The court emphasised that fake ITC cases typically involve complex factual disputes, voluminous evidence, and serious implications for the GST regime and public exchequer. Such matters, it held, are better suited for adjudication by the appellate authority under Section 107 of the CGST Act. Although the statutory period for filing an appeal had already expired, the Court took note of the circumstances and granted the petitioners liberty to file appeals before the Commissioner (Appeals), subject to making the mandatory pre-deposit. It directed that if appeals are filed by January 31, 2026, they shall not be dismissed on the ground of limitation and shall be decided on merits. The Court clarified that all observations made in the judgment would not influence the appellate authority, and all rights and contentions of the parties were left open. Case Details Case Title: VDR Colors And Chemicals Pvt. Ltd. Versus Commissioner Of Delhi Case No.: W.P.(C) 14291/2025 & CM APPL. 58491/2025 Date: 26/12/2025 Counsel For Petitioner: Uday Gupta, Sr. Adv. Counsel For Respondent: Vaishali Gupta Click Here To Read Order Read More: Customs to Release Seized Gold Jewellery After Revision Dismissal, Orders No Warehousing Charges for Delay Period: Delhi HC

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