Writ Petition Dismissed Against ITC Fraud Allegations Due to Alternate Appellate Remedy

Case Summary:

• Case Title: M/s Mahavir Metal House v. Additional Commissioner, CGST, Delhi North

• Court: High Court of Delhi

• Petition No.: W.P.(C) 8280/2025 & CM APPL. 36074/2025

• Category of Dispute: Input Tax Credit – Fraudulent Availment

• Date of Judgment: 30 May 2025

• Relevant Sections: Section 16, Section 107, Section 122 of CGST Act, 2017

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

🧾 Facts of the Case [¶3–4, 8]:

• The petitioner, M/s Mahavir Metal House, challenged the Order-in-Original dated 01.02.2025, which imposed demand and penalties following a Show Cause Notice (SCN) dated 11.06.2024.

• The SCN alleged fraudulent Input Tax Credit (ITC) claim of ₹2,38,062.

• Allegations involved collusion with other entities and no actual supply of goods or services, violating the core premise of ITC under Section 16 of CGST Act.

❓Questions in Consideration [¶5, ¶10, ¶12]:

1. Whether a writ petition is maintainable despite an alternative statutory remedy under Section 107 of the CGST Act?

2. Whether the issuance of a consolidated SCN and order for multiple years is legally sustainable?

👩‍⚖️ Observations of the Court:

• On Maintainability: The Court cited Supreme Court’s ruling in Assistant Commissioner v. Commercial Steel Ltd., clarifying that writ jurisdiction under Article 226 is not barred by alternate remedy but limited to exceptional cases (¶6–7).

• On Allegation Nature: The alleged fraudulent claim of ITC without actual supply strikes at the root of the GST regime and necessitates factual inquiry, which writ courts cannot handle (¶8–10).

• Precedent Applied: Relied on its own prior judgment in Mukesh Kumar Garg v. UOI (W.P.(C) 5737/2025), which emphasized that writ petitions in ITC fraud matters should not be entertained (¶10).

• On SCN for Multiple Years: The Court held that the issue is sub judice in Quest Infotech Pvt. Ltd. v. UOI (W.P.(C) 4392/2025) and the ruling in that matter will guide further proceedings (¶12).

⚖️ Judgment of the Court [¶11, ¶14]:

• The writ petition was dismissed on the ground that the petitioner has a full-fledged alternate remedy under Section 107 of the CGST Act.

• Clarified that observations in the order will not affect appellate proceedings.

• Petition disposed accordingly.

🧵 Between Fine Lines:

1. The Delhi High Court declined to exercise writ jurisdiction in ITC fraud cases where alternate remedies are available.

2. Fraudulent ITC availed without actual supply hits at the foundational structure of GST.

3. Writ petitions are inadmissible for such factual disputes and require appellate forums.

4. Consolidated SCN legality for multiple years is under parallel adjudication.

5. Petitioners must approach the appellate mechanism before invoking constitutional remedies.

📚 Summary of Referred Cases: