Case Reference
Malik Traders v. Principal Commissioner of Central Tax & Ors.
Delhi High Court
W.P.(C) 10555/2025, CM APPL. 43737/2025 & CM APPL. 43738/2025
Category: Input Tax Credit (Fraudulent availment)
Date of Judgment: 23.07.2025
Relevant Provisions: Section 16, Section 107, Section 122 of CGST Act, 2017
Facts (Paras 2–4)
Malik Traders, through its proprietor, challenged the order-in-original dated 28 January 2025 relating to FY 2017–18 to 2021–22, and also a show cause notice dated 24 July 2024 for FY 2018–19 and 2019–20. The case pertained to allegations of fraudulent availment of ITC by the petitioner, arising out of an investigation covering 108 firms. The petitioner argued before the Court that overlapping proceedings had been initiated by both the State and Central GST authorities for the same financial years.
Questions / Dispute (Paras 3–5)
The principal dispute was whether writ jurisdiction under Article 226 of the Constitution could be invoked in a case of alleged fraudulent ITC availment, despite availability of a statutory appellate remedy under Section 107 of the CGST Act. The petitioner argued multiplicity of proceedings, whereas the department maintained that no overlap existed since the proceedings concerned different transactions.
Observations (Paras 6–7, quoting Mukesh Kumar Garg case paras 11–18)
The Court emphasized that fraudulent ITC cases involving bogus invoicing entail serious allegations and complex factual analysis. The facility of ITC under Section 16, designed to encourage ease of doing business, was being grossly misused. Permitting such abuse would dent the GST regime.
The Court reiterated its earlier decision in Mukesh Kumar Garg v. Union of India (W.P.(C) 5737/2025), holding that writ jurisdiction should not ordinarily be exercised in fraudulent ITC cases since factual determination is required. Appeals under Section 107 are the proper remedy, with the Appellate Authority competent to examine proportionality of penalty, role of petitioner, and applicability of Section 122(1) and 122(3). Entertaining writ petitions in such circumstances would allow unscrupulous litigants to bypass statutory remedies, create multiplicity of proceedings, and risk contradictory findings.
Judgment (Paras 8–10)
The Court held that the impugned order is appealable under Section 107 of the CGST Act. The petitioner was granted liberty to file an appeal before the Appellate Authority along with the statutory pre-deposit by 31 August 2025. If filed within the said time, it would not be dismissed on limitation grounds and would be heard on merits. The writ petition was accordingly disposed of.
Table of Case Referred
| Case | Court & Citation | Ratio / Verdict |
|---|---|---|
| Mukesh Kumar Garg v. Union of India & Ors., W.P.(C) 5737/2025 | Delhi High Court | Writ petitions challenging orders involving fraudulent ITC through bogus invoicing are not to be entertained; remedy lies in statutory appeal under Section 107; writ jurisdiction not suited for detailed factual analysis. |
Between Fine Lines
For businesses, this ruling reinforces that in cases of alleged fraudulent ITC, High Courts will not entertain writ petitions. The only viable course is to file an appeal under Section 107 of the CGST Act with requisite pre-deposit. Writ petitions will be dismissed as courts view such ITC misuse as serious abuse of the GST system.
Disclaimer – “The above summary is for academic purpose only; not formal legal opinion. Seek professional opinion before application. Author or publisher or website shall not be responsible for any usage in any form.”
