2025 (7) TMI 1618 - HC - GST

Fraudulent availment of input tax credit (ITC) by 23 fake firms - allegations of existence of a total of 408 buyers/recipients from the said 23 fake firms which resulted in an investigation revealing that approximately Rs. 63.83 crores was availed as ITC - HELD THAT - This Court while deciding the above stated matter has already taken a view in this regard that where cases involving fraudulent availment of ITC are concerned considering the burden on the exchequer and the nature of impact on the GST regime the writ jurisdiction ought not to be exercised in such cases. This being a case where allegations of fraudulent availment of ITC has been raised in view of the decision in Mukesh Kumar Garg vs. Union of India Ors. 2025 (5) TMI 922 - DELHI HIGH COURT the writ petition ordinarily would not be entertainable. The Petitioner submits that a personal hearing was fixed in this matter on 13th December 2024 and the Petitioner got the notice for the same only on 12th December 2024 - a reply was filed on behalf of the Petitioner on 10th December 2024 however the same has not been considered while passing the impugned order. A perusal of the impugned order would show that some of the parties have in fact appeared in the matter. This Court is of the view that an opportunity can be granted to the Petitioner to avail of the appellate remedy under Section 107 of the Central Goods and Service Tax Act 2017 - Let the appeal be filed by the Petitioner by 31st August 2025 along with the relevant pre-deposit. If the same is filed within the stipulated time it shall not be dismissed on the ground of limitation and shall be adjudicated on merits. Petition disposed off.

Summary

ISSUES:

Whether writ jurisdiction under Article 226 can be exercised in cases involving allegations of fraudulent availment of Input Tax Credit (ITC) under the CGST Act.Whether the existence of alternate statutory remedy under Section 107 of the CGST Act bars the maintainability of a writ petition challenging demands and penalties for fraudulent ITC.Whether principles of natural justice were complied with in the impugned order and if non-consideration of petitioner's reply affects the legality of the order.Whether an opportunity to file an appeal under Section 107 of the CGST Act should be granted despite the writ petition being dismissed.

RULINGS / HOLDINGS:

Writ jurisdiction ought not to be exercised in cases involving fraudulent availment of ITC, considering the burden on the exchequer and the impact on the GST regime, as such matters require detailed factual analysis beyond the scope of writ proceedings.The existence of an alternate remedy under Section 107 of the CGST Act generally bars writ petitions, except in exceptional circumstances such as breach of fundamental rights, violation of natural justice, excess of jurisdiction, or challenge to the vires of the statute, none of which were established in the present case.The impugned order complied with the basic requirements of principles of natural justice by providing opportunities for personal hearing, and the non-consideration of the petitioner's reply does not vitiate the order as the petitioner failed to appear for the hearings.The petitioner is granted an opportunity to file an appeal under Section 107 of the CGST Act within a stipulated time with the relevant pre-deposit, and such appeal shall be adjudicated on merits without dismissal on limitation grounds.

RATIONALE:

The Court applied the legal framework under Article 226 of the Constitution and the provisions of the Central Goods and Services Tax Act, 2017, particularly Sections 16 (Input Tax Credit), 107 (Appeal), and 122 (Penalty).Precedent was relied upon where writ jurisdiction was declined in cases of fraudulent ITC to prevent misuse of the GST regime and avoid multiplicity of litigation and contradictory findings across forums.The Court emphasized that factual disputes and complex transactions require adjudication by the statutory appellate authority rather than through writ proceedings.Reference was made to Supreme Court authority holding that writ petitions are maintainable only under exceptional circumstances when alternate statutory remedies exist.The Court noted compliance with principles of natural justice through adequate notice and opportunity for personal hearing, and that ex-parte decisions are permissible where parties are non-responsive.No dissent or doctrinal shift was indicated; the judgment follows established jurisprudence restricting writ intervention in GST fraud matters.