Facts of the Case

The petitioner, M/S. Aman Sanitation, challenged an Order-in-Original dated 21.01.2025 raising a demand of Rs.1,11,41,684/- against it, arising from a large-scale CGST-Delhi North investigation into fraudulent ITC transfers by 79 non-existent/fake firms to 1,155 recipient taxpayers, involving more than Rs.122 crore of fraudulently passed-on credit. The petitioner featured at serial number 19 among 1,155 noticees. The petitioner contended that no personal hearing was granted and that its reply dated 05.08.2024 was not considered, which the Department disputed, asserting the reply was noted and considered in the detailed impugned order.

Issues Involved

  1. Whether the Delhi High Court should exercise Article 226 writ jurisdiction to examine a demand order arising from a large, multi-party fraudulent ITC investigation.
  2. Whether the petitioner's claim of denial of personal hearing and non-consideration of its reply, disputed by the Department, warrants interference in writ.

Petitioner's Arguments

  • No personal hearing was granted, in violation of principles of natural justice.
  • The petitioner's reply dated 05.08.2024 was not considered in the impugned order.

Respondent's Arguments

  • The filing of the reply is mentioned in the impugned order and has in fact been considered in the detailed order passed by the Adjudicating Authority.

Court Order / Findings

  • The Court reiterated its consistent line of authority (Commercial Steel Ltd. (SC), Mukesh Kumar Garg, Sheetal and Sons, MHJ Metal Techs) that writ jurisdiction ought not ordinarily be exercised in cases of fraudulent ITC availment, given the complex maze of transactions among non-existent firms requiring detailed factual analysis, and the burden on the exchequer and impact on the GST regime.
  • It reiterated that Input Tax Credit under Section 16 of the CGST Act is a business-friendly facility whose misuse through fake firms and goods-less invoices causes an enormous dent in the GST regime, and that such matters are best examined by the appellate authority under Section 107.
  • The Court declined to entertain the writ petition, but permitted the petitioner to avail the statutory appeal under Section 107, by a fixed date along with the requisite pre-deposit, with an assurance that the appeal would be entertained on merits and not dismissed for limitation.
  • It clarified that its observations would not bind or influence the appellate authority's final adjudication.

Important Clarification

  • In large-scale fraudulent ITC investigations involving fake/non-existent firms and hundreds of recipient taxpayers, the Delhi High Court's settled practice is to decline writ review of the merits (including disputed factual claims about hearing/reply consideration) and instead relegate the taxpayer to a statutory appeal, while protecting the appeal from a limitation bar caused by the pendency of the writ.

Sections Involved

  • Section 16, CGST Act, 2017 – conditions for availing Input Tax Credit, central to the fraud allegations.
  • Section 107, CGST Act, 2017 – statutory appeal remedy to which the petitioner was relegated.

Decision – In Favour of

Decided against the Petitioner on the writ; the petition was disposed of without interference on merits, with liberty to pursue a statutory appeal on a limitation-protected basis.

Case Details

High Court of Delhi at New Delhi; W.P.(C) 14927/2025; Coram: Justice Prathiba M. Singh and Justice Shail Jain; Order dated 19.11.2025.

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