Fraudulent GST ITC | Supreme Court Upholds Composite GST Demand; Rejects Plea on ‘Non-receipt of Notice’ and ‘Bunching of Years’

The Supreme Court of India has dismissed the Special Leave Petition affirming a major tax demand raised by the Delhi GST authorities for alleged fraudulent availment and utilisation of Input Tax Credit (ITC). “However, we find no good ground and reason to interfere with the impugned judgment/order passed by the High Court. The special leave petition is, accordingly, dismissed. Pending application(s), if any, shall stand disposed of,” the bench of Justice Sanjay Kumar and Justice Alok Aradhe stated while upholding Delhi High Court’s judgement by which the petition was dismissedwith the cost of Rs. 50K for concealing facts and upheld the consolidated Show Cause Notices (SCNs) in fraudulent Input Tax Credit (ITC) cases. The decision effectively endorses the Delhi High Court’s ruling and settles two contentious issues that frequently arise in GST disputes across the country. The case centred around a show cause notice (SCN) and a composite assessment order issued by the department alleging that the company had availed ITC running into several crores based on invoices from fake or non-existent suppliers. The SCN consolidated alleged fraudulent transactions spanning four financial years—2017–18 to 2020–21—into a single notice and one adjudication order. The taxpayer challenged the assessment before the Delhi High Court and later the Supreme Court, primarily arguing procedural lapses: Violation of natural justice on the ground that personal hearing notices were never received. Illegality of “bunching” multiple financial years into a single SCN and assessment order, contrary to the statutory scheme. The High Court rejected both arguments, and the Supreme Court has now endorsed this view by dismissing the SLP at the admission stage. The brief order reads: “Having heard learned counsel for the petitioner and upon perusal of the record, we find no good ground and reason to interfere with the impugned judgment and order passed by the (Delhi) High Court. The special leave petition is dismissed.” Court Affirms E-mail as Valid Service Under Section 169 On the question of service of notice, the High Court observed—and the Supreme Court effectively affirmed—that Section 169(1)(c) of the CGST Act clearly recognises service via the registered e-mail address as a valid mode of communication. The department produced evidence that hearing notices were emailed multiple times to the ID provided in the GST portal. The Court stressed that actual physical delivery or personal acknowledgement is not a legal requirement, and taxpayers cannot avoid liability by claiming they missed or did not check their e-mails. Even if an e-mail lands in the spam folder or remains unread, service is deemed complete once it is sent to the registered address. This ruling substantially limits the ability of taxpayers to challenge assessments on the ground of “non-receipt” of notices. Composite SCN Across Multiple Years Held Legally Permissible The second major contention involved the department’s decision to combine several years of alleged ITC fraud into a single SCN and order. The taxpayer argued that each financial year required a separate notice and adjudication. The Court rejected this argument, noting that Sections 73 and 74 of the CGST Act refer to the term “period”—a deliberate legislative choice that allows flexibility. The Court held that GST officers are permitted to issue one consolidated notice when the alleged fraud, suppression, or misstatement forms part of a continuous or interconnected chain of transactions, as is typical in circular trading, bogus billing, or missing dealer cases. The judgment emphasises practicality: in widespread ITC fraud schemes that stretch over multiple years, insisting on separate SCNs for each year would impede effective investigation and delay recovery. Wider Impact: Two Major Technical Defences Weakened By refusing to interfere with the High Court’s reasoning, the Supreme Court has effectively closed the door on two commonly used procedural defences in GST litigation: 1. “I did not receive the notice” is no longer a viable groundOnce the department demonstrates that the notice was sent to the registered e-mail or uploaded on the GST portal, service is deemed complete. Taxpayers are expected to regularly monitor these channels. 2. Consolidation of multiple years into one SCN is validWhere fraudulent activity spans several years, authorities can lawfully issue a single composite notice. This strengthens the enforcement framework against large-scale ITC fraud operations. Case Details Case Title: M/S Mathur Polymers Versus Union Of India Case No.: SPECIAL LEAVE PETITION (CIVIL) Diary No. 50279/2025 Date: 07-11-2025 Click Here To Read Order Read More: Natural Justice in GST Rectification: Calcutta High Court Reaffirms Right to be Heard

Ask Jurishour AI

Fraudulent GST ITC | Supreme Court Upholds Composite GST Demand; Rejects Plea on ‘Non-receipt of Notice’ and ‘Bunching of Years’

Membership Required

Latest articles

Service Tax Demand on Irrigation Works Quashed: Karnataka HC Rules Sale of Goods Component Not Taxable as Service

Search Conducted After 1 April 2021 Triggers S. 148 Procedure: ITAT

Excel Sheet Recovered From Third-Party Can’t By Itself, Establish Sufficient Nexus Between Alleged Cash Transactions And Assessee: ITAT

Tax Demand Rendered Irrecoverable Under NCLT Resolution Cut-Off: ITAT

More like this

Service Tax Demand on Irrigation Works Quashed: Karnataka HC Rules Sale of Goods Component Not Taxable as Service

Search Conducted After 1 April 2021 Triggers S. 148 Procedure: ITAT

Excel Sheet Recovered From Third-Party Can’t By Itself, Establish Sufficient Nexus Between Alleged Cash Transactions And Assessee: ITAT

About us

Company

Categories