Facts of the Case

The petitioner, VSA Trading Pvt. Ltd., filed a writ petition challenging the Order-in-Original dated 21.01.2025 passed by the Additional Commissioner of Central GST, Delhi North. By the impugned order, GST demand of ₹34,47,419 along with interest and penalty was raised against the petitioner on allegations of fraudulent availment of input tax credit. The proceedings arose out of a large-scale investigation initiated by CGST Delhi North Commissionerate involving 79 non-existent firms which allegedly passed on fraudulent ITC exceeding ₹122 crores to 1,155 taxpayers. The petitioner was one of the recipients identified in the investigation and was listed at Serial No. 68 in the impugned order.

Issues Involved

Whether the High Court should exercise writ jurisdiction in cases involving allegations of fraudulent availment of input tax credit through non-existent entities, whether alleged violation of principles of natural justice warranted interference, and whether the petitioner should be relegated to the statutory appellate remedy under Section 107 of the CGST Act.

Petitioner’s Arguments

The petitioner contended that no proper hearing was afforded during adjudication, resulting in violation of principles of natural justice. It was also argued that the show cause notice contained a typographical error mentioning the due date for filing reply as 28.08.2025 instead of 28.08.2024, which allegedly caused prejudice to the petitioner. The petitioner sought interference of the High Court under Article 226 of the Constitution.

Respondent’s Arguments

The Revenue submitted that the petitioner was fully aware of the proceedings and that the show cause notice had been properly uploaded on the GST portal. It was contended that despite knowledge of the allegations, the petitioner failed to file any reply on merits. The Revenue emphasized that the case involved serious allegations of fraudulent ITC involving complex factual issues and that the impugned order was appealable under Section 107 of the CGST Act.

Court Order / Findings

The Delhi High Court held that the typographical error in the show cause notice could not be taken advantage of by the petitioner, particularly when no reply was filed even thereafter. The Court observed that cases involving fraudulent availment of ITC typically involve complex factual analysis, voluminous evidence, and interconnected transactions among multiple entities, which are not suitable for adjudication in writ jurisdiction. Relying on binding precedents of the Supreme Court in Assistant Commissioner of State Tax vs. Commercial Steel Limited and consistent decisions of the Delhi High Court including Mukesh Kumar Garg, Sheetal and Sons, MHJ Metal Techs, and Toshniwal Electricals Pvt. Ltd., the Court held that writ jurisdiction ought not to be exercised in such cases. The petitioner was therefore relegated to the statutory appellate remedy.

Important Clarification

The Court clarified that any observations made in the writ proceedings would not prejudice the appellate authority while adjudicating the appeal on merits. The Court also advised the GST Department to exercise caution in future while mentioning financial years, reply dates, and material particulars in show cause notices and adjudication orders to avoid unnecessary litigation.

Final Outcome

The writ petition was disposed of. The petitioner was granted liberty to file an appeal under Section 107 of the Central Goods and Services Tax Act, 2017 by 15.01.2026 along with the requisite pre-deposit. It was directed that if the appeal is filed within the stipulated time, it shall be entertained on merits and shall not be dismissed on the ground of limitation.

Source Link- https://delhihighcourt.nic.in/app/showFileJudgment/PMS01122025CW181282025_222203.pdf

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