Delhi High Court Disposes Writ Against GST Demand, Directs Section 107 CGST Appeal And Cautions Department On Incorrect Dates In Financial Years, Due Dates In SCNs & Orders
Isabella Mariam
The High Court of Delhi Division Bench of Justice Prathiba M. Singh and Justice Renu Bhatnagar disposed of a writ petition by declining to interfere with a demand order alleging fraudulent availment of input tax credit under the GST regime and directing the registered taxpayer to pursue the statutory appellate remedy under Section 107 of the CGST Act, with liberty to file an appeal by 15 January 2026 that shall be heard on merits if the requisite pre-deposit is made. In doing so, the Bench also asked the GST authorities to exercise care while indicating financial years and crucial dates in show cause notices and orders, after observing that the reply due date had been mistakenly typed as 28 August 2025 instead of 28 August 2024.
The petition was filed under Article 226 challenging the Order-in-Original dated 21 January 2025 issued by the Additional Commissioner of Central GST, Delhi North. The order raised a tax demand against the petitioner. A similar challenge to the same order had previously resulted in the Court directing the concerned party to avail the statutory appellate remedy.
The petitioner argued that no proper hearing had been provided and pointed out an incorrect date mentioned in the notice, asserting violation of natural justice. The petition arose from allegations of fraudulent availment of Input Tax Credit following an investigation involving 16 taxpayers suspected of non-existent operations. The Department’s scrutiny indicated outward ITC transfers exceeding Rs.122 crores to 1155 taxpayers and notices were issued to all associated recipients.
The petitioner appeared as serial number 106 in the impugned order with a liability of Rs. 23,20,171/-. The respondents submitted that the show cause notice had been properly uploaded, no reply had been filed, and the petitioner had only written a letter seeking documents. The matter involved examination of factual issues relating to the alleged ITC transactions, and consideration of the statutory appellate mechanism under Section 107 of the CGST Act.
The Court recorded that the petitioner claimed absence of proper hearing and attempted to rely on a typographical error in the notice; however, it stated that “the same was merely an error which cannot be taken advantage of” and that there was “nothing on record to show that the ld. Counsel for the Petitioner has ever filed any reply in the matter.” It noted that the issue arose from “allegations of fraudulent availment of Input Tax Credit… wherein an investigation had been initiated against 16 tax payers” and that scrutiny had revealed that “the total amount, which was transferred by these firms, was ITC of more than Rs.122 crores to 1155 taxpayers.”
The Court stated that in such matters “there are complex transactions involved which require factual analysis and consideration of voluminous evidence” and that the burden on the GST regime required balancing through statutory appeal. It referred to the Supreme Court decision in Commercial Steel Ltd., stating that a writ petition may be entertained only in limited situations and that “none of the above exceptions was established” in that precedent. The Court also quoted its prior decisions concerning ITC fraud cases, observing that “allegations… are extremely serious in nature” and that misuse of ITC “would create an enormous dent in the GST regime itself.” It recorded that adjudication of factual aspects, including the petitioner’s role and proportionality of penalty, “cannot be decided in writ jurisdiction.” It further stated that persons involved in such transactions “cannot be allowed to try different remedies before different forums.”
The Court found no basis to adopt a different approach in this case, noting that the show cause notice had been uploaded and no substantive reply was filed. It recorded that the petitioner had only written a letter seeking documents. It stated that “the Court shall not interfere” in such circumstances and that the petitioner would need to pursue the statutory appellate mechanism.
The Court directed that the petitioner “is also relegated to avail of the appellate remedy under Section 107 of the Central Goods and Service Tax Act, 2017, in accordance with law. If the Appeal is filed by 15th January, 2026 along with the requisite pre-deposit, the same shall be entertained on merits and shall not be dismissed on the ground of limitation.”
“CGST Department is advised to exercise caution in future while mentioning financial years, due dates for replies and such material particulars in the show cause notices and orders. A copy of this Order be communicated by the Registry, as also by Mr. Shashank Sharma, ld. Counsel for the Respondent to Mr. Manish Kumar, Chief Commissioner of Central Tax, CGST, Delhi Zone… for necessary information and compliance.”
“A copy of this order be circulated by Mr. Manish Kumar, Chief Commissioner of Central Tax, CGST, Delhi Zone, to all Commissionerates, highlighting that there are many errors in the orders and show cause notices, so that the same can be properly supervised and rectified. The petition is disposed of in the above terms. All pending applications are also disposed of.”
Advocates Representing the Parties
For the Petitioner: Mr. S. B. Sharma, Mr. Yashwant Gehlot, Advocates
For the Respondents: Mr. Shashank Sharma, SSC; Ms. Malika Kumari, Advocate for R-1
Case Title: M/s A V Metals Marketing Pvt. Ltd. v. Principal Commissioner, CGST and Anr.
Neutral Citation: 2025: DHC:10770-DB
Case Number: W.P.(C) 18230/2025
Bench: Justice Prathiba M. Singh; Justice Renu Bhatnagar
