Delhi HC Declines Writ Against ₹550 Cr. GST Demand; Directs to Appellate Remedy

Case Details

• Case Name: M/s Montage Enterprises Pvt. Ltd. & Ors. v. CGST Delhi North & Ors.

• Court: High Court of Delhi

• Petition Number: W.P.(C) 4774/2025 & CM APPL. 21990/2025, 21991/2025

• Date of Judgement: 25th April, 2025

• Coram: Justice Prathiba M. Singh, Justice Rajneesh Kumar Gupta

• Category: GST Demand / Writ Jurisdiction / Natural Justice

• Relevant Sections: Article 226 of the Constitution; Sections 73 & 74 of CGST Act, 2017; related GST rules

• Dispute: Demand of over ₹550 crores alleging bogus invoicing and diversion of packaging materials.

Facts of the Case (Paras 3–7)

• The Department issued an SCN dated 30.07.2024 to 286 entities, including the petitioner, alleging bogus invoicing of packaging materials diverted to paan masala and tobacco manufacturers.

• Petitioners allegedly created multiple shell firms to route transactions. On discovery of the investigation, they initiated insolvency proceedings for such entities.

• A demand of ₹550 crores was raised vide Order-in-Original dated 31.01.2025.

• Petitioners initially sought an extension (26.08.2024) but delayed filing reply till 28.01.2025, when a 3000-page reply was filed with ledgers and statements.

• They contended RUDs were not supplied and cross-examination was denied.

Question(s) in Consideration (Paras 8–10)

1. Whether denial of RUDs and cross-examination invalidates the adjudication order.

2. Whether extraordinary writ jurisdiction under Article 226 can be invoked against the demand order when appellate remedy exists.

Observations of the Court (Paras 10–14)

• Petitioners delayed filing reply and requested RUDs five months after SCN, showing lack of diligence.

• The reply filed showed that Petitioners already had substantial documents, indicating requests were not bona fide.

• The Court noted the limitation deadline (05.02.2025) for passing order was well-known to Petitioners.

• Insolvency proceedings against related companies were also suspected to be fraudulent to frustrate recovery.

• Court found no ground to exercise writ jurisdiction.

Judgement of the Court (Paras 15–17)

• Writ petition dismissed.

• Petitioners may avail appellate remedy. If appeal is filed within 30 days with pre-deposit, it will be heard on merits without limitation bar.

• Observations in this order will not prejudice appellate proceedings.

Between Fine Lines (5-line Simplified Summary)

1. Montage Enterprises faced a ₹550 crore GST demand for bogus invoicing.

2. They argued missing documents and denial of cross-examination.

3. The Court found they delayed filing reply and acted without diligence.

4. Writ petition was dismissed, as appellate remedy exists.

5. They may still file appeal within 30 days with pre-deposit.

Summary of Referred Cases

(No specific precedents referred in judgment text; arguments confined to facts of the case.)

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