The Rajasthan High Court recently rejected a legal appeal from a person who was accused of being involved in a fraudulent scheme related to GST ITC worth ₹100 crore.
The court, citing the equity principle that “he who comes into equity must come with clean hands,” denied relief and charged Rs 5 lakh on the applicant. The bench ruled that while procedural lapses by enforcement officers were marked, the bogus conduct of the company barred it from pursuing discretionary remedies.
A registered dealer, Korfex Industries Pvt. Ltd under GST in Rajasthan had purchased remelted lead from a Haryana‑based supplier and generated e‑way bills and invoices for its transport to its Bhiwadi factory.
As per the applicant, the vehicle carrying the remelted lead had already reached its factory premises in Bhiwadi, Rajasthan, on 29 July 2025, backed by GPS logs, CCTV footage, e‑way bills, and tax invoices.
The counsel cited that issuing GST MOV-02 after goods had arrived was not legal, as Section 68 provides authority for the inspection of goods in movement. The applicant mentioned that the inspection period expired without an extension, no detention order under MOV-06 was issued, and the vehicle was unlawfully relocated 250 km away to Jaipur.
The company claimed harassment, loss of ₹18,000 because of illegal detention, and breach of natural justice.
Also Read: Orissa HC Dismisses Petition on GST ITC Claims for a Non-Existent Entity and Fake Invoices
It was claimed by the State and Union tax authorities that Korfex Industries was part of a larger cartel operating in Delhi, Haryana, Punjab, and Himachal Pradesh. This cartel was allegedly orchestrating sham transactions to fraudulently claim Input Tax Credit, surpassing ₹100 crore.
The authorities claimed that the applicant obtained fake invoices from non-existent or deregistered firms in Delhi, creating artificial outward supplies and taking advantage of systemic gaps in the GST portal.
From the investigation, it was discovered that the goods in question originated from Delhi, though documents incorrectly showed supply from a Haryana-based firm. As per the respondents, the detention under MOV-02 did not comply with the law, and the proceedings u/s 130 GST Act for confiscation were justified.
The Division Bench, including Acting Chief Justice Sanjeev Prakash Sharma and Justice Sanjeet Purohit, analysed the statutory framework under Sections 68, 129, and 130 of the GST Act and related rules.
Procedural lapses arrived in the way of detention and movement of goods, the court considered. But the applicant’s conduct, colluding with fictitious suppliers and taking fake GST ITC, undermined the core of the GST regime.
The court, while citing the maxim “he who comes into equity must come with clean hands,” held that discretionary relief cannot be granted before a litigant involved in bogus practices. The precedent of the Apex court in Tomorrowland Ltd. v. HUDCO (2025) supports that equity demands transparency and honesty. As per the bench, what the law prohibits cannot be achieved indirectly, condemning the attempt of applicant to control loopholes in the GST system.
With the costs of Rs 5 lakh, the writ petition was dismissed, recoverable from the applicant company through its Director. The court asked the GST authorities to continue proceedings u/s 130 GST Act and take measures to plug systemic gaps that promoted the circulation of bogus ITC.
| Case Title | Korfex Industries Pvt. Ltd. vs. State of Rajasthan |
| Case No. | D.B. Civil Writ Petition No. 12230/2025 |
| For Petitioner | Ms Urvashi Dugga, Mr HV Nandwana |
| For Respondent Nos. 1 to 3 | Mr Bharat Vyas, Mr Jaivardhan Joshi |
| For Respondent No. 4 | Mr Rakesh Choudhary, Mr Siddhant Jain |
| Rajasthan High Court | Read Order |
