Case Details:
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Case Title: KMG Industrial Traders Pvt. Ltd. & Anr. v. Additional Commissioner Adjudication, CGST
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Court: High Court of Delhi
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Petition Number: W.P.(C) 5703/2025, CM APPL. 26027/2025 & CM APPL. 26028/2025
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Date of Judgement: 01.05.2025
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Category of Dispute: Input Tax Credit (ITC) – Fake Invoice Allegation
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Relevant Sections: Section 74 & Section 107 of the CGST Act, 2017
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Order-in-Original: No. 84/ADJ-DGGI/DN/2024-25 dated 27.01.2025
Facts of the Case
(Ref: Para 3–5)
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The Department raised a demand of ₹27.15 crores against the Petitioner alleging receipt of fake ITC from five entities — M/s Delta Agrotech Pvt. Ltd., M/s Galux International, M/s Shriram Overseas, M/s Y. M. Foodways Pvt. Ltd., and M/s Sant Overseas.
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The Petitioner argued that their reply dated 15.04.2024 to SCN No. SCN-03/AKM/22-23 (issued under Section 74 on 31.03.2023) was not considered by the Department.
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It was also alleged that personal hearing notices were not duly served.
Question(s) in Consideration
(Ref: Para 5–7)
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Whether the Department failed to consider the Petitioner’s reply before passing the impugned order?
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Whether the personal hearing notices were duly served as per procedure?
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Whether the Petitioner should be allowed to bypass the statutory appellate remedy?
Observation of the Court
(Ref: Para 8–10)
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The Petitioner had already deposited ₹2.5 crores on 16.09.2020, which forms a substantial part of the mandatory 10% pre-deposit required under Section 107 CGST Act for filing an appeal.
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Since the impugned order is appealable, the proper course is to approach the appellate authority.
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The appellate authority should consider the Petitioner’s reply dated 15.04.2024 and any additional documents if the appeal is filed within 30 days along with the balance pre-deposit.
Judgement of the Court
(Ref: Para 9–12)
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The Petitioners are directed to file an appeal under Section 107 CGST Act within 30 days along with the remaining pre-deposit.
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The appellate authority shall not dismiss the appeal on limitation if filed within this period and shall decide it on merits after considering the reply and supporting documents.
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Petition disposed of; rights and remedies left open.
Between Fine Lines
In simple terms, the Delhi High Court did not decide on the merits of the ₹27.15 crore ITC fraud allegation but directed the Petitioner to go through the statutory appeal route. Since part of the pre-deposit was already made, the Court allowed 30 days to pay the balance and file the appeal. The appellate authority must then consider the Petitioner’s earlier reply and decide on merits without rejecting the appeal on limitation.
Summary of Referred Cases
No other cases were referred to in the judgment.
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