Delhi High Court Rejects GST Writ Over Fraudulent ITC, Grants One Month for Appeal with Pre-Deposit

The High Court of Delhi has rejected a request to challenge a demand related to Goods and Services Tax (GST), which included claims of fraudulent tax credits. However, the court has given the applicant one month to file an appeal, provided they make the necessary upfront payment.

Utkash Arora, the applicant, was named in a case by the Central Goods and Services Tax Department for alleged bogus ITC. During the investigation, it was discovered that three firms, M/S Shreya Impex, M/S Akshita Enterprises, and M/S Modern Metal Industries, were governed by Vijay Prakash Sharma, with his wife and accountant listed as proprietors of two of the firms.

23 firms had claimed fake ITC of ₹1,22.26 crore without receiving any goods, officials determined. No physical company was there, and only made to issue fake invoices, the supplier firms discovered. The applicant, along with some entities, was accused of assisting the pass on the same bogus ITC.

As per the order, a few notices paid part of their dues, while most overlooked the summons. The applicant, listed as M/s Aura Interior Hardware at serial no. 174, encountered a demand of ₹1,14,114 with penalty, established on records revealing the passing of inadmissible ITC.

Read Also:- Delhi HC Gives Relief After Duplicate GST Order Appears on Portal, Allows Reply to SCN Notices

No SCN was issued, and no personal hearing has been undergone, the counsel of the applicant said. Under the order, it mentioned that it was incorrect, specifying that hearings were set on 13.12.2024, 30.12.2024, and 13.01.2025. Some parties attended and gave submissions, though many, including the applicant, did not, so the case was decided ex parte on the available proof. 

The counsel, there was no notice for 2020-21, only for 2017-18. Under the order, it cites that the case covered the period from 2017 to 2023.

Justice Prathiba M.Singh and Justice Rajneesh Kumar Gupta, the firm’s of the supplier were fake and made for only to issue the invoices, and referred to its earlier ruling in Mukesh Kumar Garg vs. Union of India & Ors., where it held that writ jurisdiction must not ordinarily be used in cases of fake ITC because of the burden on the exchequer and the impact on the GST system.

The court cited that the applicant approached it post appeal filing time had already expired and ruled that the claim for the order being time-barred was not valid since the order was passed on 27 January 2025 and dispatched on 1 February 2025, within the allowed due date of 5 February 2025.

According to the bench, the case was of a fake ITC and will not entertain the writ petition. But it permitted the applicant 1 month to submit a response with the needed pre-deposit, citing that if the same is submitted within this duration, the appeal shall not be denied for being late and shall be determined on the basis of merits.