The Delhi High Court has refused to entertain writ petition filed by a company allegedly involved in Rs. 550 Crore goods and service tax (GST) fraud.
The bench of Justice Prathiba M. Singh and Justice Rajneesh Kumar Gupta observed that the Petitioners all along had all the requisite information to reply to the SCN, however, it chose not to file the same for almost six months. It was only when the personal hearing notice was given, due to the imminent expiry of the limitation period for passing the order, that the Petitioners have chosen to file a reply. The Petitioner only then raised objections in respect of relied upon documents (RUDs) and non-grant of opportunity for cross-examination. The Petitioners have, clearly, not been diligent in the matter.
The petitioner has challenged the Order passed by the Joint Commissioner, Adjudication CGST, Delhi North. It was alleged in the order that a demand of over Rs. 550 crores against various firms including the Petitioner has been raised.
The case of the Department is that an investigation in respect of evasion of GST was conducted against 286 entities, including the Petitioner, which are noticees in the present case. The modus operandi as contained in the Show Cause Notice dated 30th July, 2024 (SCN) is that the Petitioner was issuing bogus invoices to various firms, which were either non- existent or non-operational, in respect of packaging material/laminates.
However, the packaging material was, in fact, being diverted to various paan masala and tobacco manufacturing units. It was also allegedly learnt during the said investigation that the Petitioner’s directors and promoters had themselves set up various other companies/firms, which were, in fact, being used to show sales in respect of bogus invoices.
Upon becoming aware of the said investigation, the Petitioner is stated to have initiated appropriate proceedings under the Insolvency and Bankruptcy Code, 2016 in respect of the companies/firms.
It was alleged by the Department that there were various depots, transporters and firms, which were all bogus, non-operational and non-existent since their GSTIN numbers were cancelled and the same were operational only for a short period. The various companies and the premises, which were searched, are detailed in the SCN. The various invoices, which show the manner in which incorrect transport has been availed and the manner in which the goods have been diverted, are also explained in detail in the SCN.
The SCN has been issued to 286 firms, including the firms which were the purchasers from the Petitioners. Statements have been recorded and upon the SCN being served upon the Petitioners, no reply was filed by the Petitioners.
The Department submitted that the insolvency proceedings have also been fraudulently initiated against the companies from whom the recoveries were to be made by the Department.
The court granted the liberty to the Petitioners to avail of their appellate remedies in accordance with law. If the appeal is filed within a period of 30 days from now along with the requisite pre-deposit, the same shall be entertained on merits and not be dismissed on the ground of limitation.
Case Details
Case Title: M/S Montage Enterprises Private Limited Versus Central Goods And Services Tax Delhi North & Ors.
Case No.: W.P.(C) 4774/2025 & CM APPL. 21990/2025, 21991/2025
Date: 25th April, 2025
Counsel For Petitioner: Tarun Gulati, Sr Adv.
Counsel For Respondent: Anurag Ojha, SSC
