Writ Petition Dismissed: ITC Fraud Allegations to be Agitated Before Appellate Authority

Case Details:
Case Title: M/s Rohtas Trading Co. v. Additional Commissioner, CGST, Delhi North
Court: Delhi High Court
Petition No.: W.P.(C) 8039/2025
Category of Dispute: Input Tax Credit
Date of Judgement: 30th May, 2025
Relevant Sections: Section 16, Section 107, and Section 122 of the CGST Act, 2017
Coram: Justice Prathiba M. Singh, Justice Rajneesh Kumar Gupta

Facts of the Case (¶3–5):

• The petitioner, M/s Rohtas Trading Co., challenged an Order-in-Original dated 01.02.2025 that raised demand and penalties following a Show Cause Notice (SCN) dated 11.06.2024, alleging fraudulent availment of Input Tax Credit (ITC) worth ₹20,19,791.

• The petitioner argued that (i) the SCN and final order were issued by different authorities and (ii) a consolidated SCN was issued for multiple financial years, which is under challenge in another case (W.P.(C) 4392/2025).

Questions in Consideration (¶5–6):

1. Whether issuance of SCN and final order by different officers violates principles of natural justice.

2. Whether consolidated SCN for multiple years is legally valid.

3. Whether writ petition under Article 226 is maintainable despite the availability of appellate remedy under Section 107 of CGST Act.

Observations of the Court (¶6–10):

• The Court reiterated that writ jurisdiction under Article 226 should be sparingly exercised and only under exceptional circumstances such as breach of fundamental rights or violation of natural justice.

• Referring to the Supreme Court’s decision in Assistant Commissioner of State Tax v. Commercial Steel Ltd. (Civil Appeal No. 5121/2021), the Court held that no such exceptions were met in this case.

• The Court observed that allegations involved fraudulent ITC claims without actual supply of goods or services, striking at the core of Section 16 benefits.

• Referred to its earlier judgement in Mukesh Kumar Garg v. UOI where similar contentions were declined under writ jurisdiction due to seriousness of ITC fraud allegations and existence of statutory appeal.

Judgement of the Court (¶11–14):

• The writ petition was dismissed with liberty to the petitioner to pursue appellate remedy under Section 107 of CGST Act.

• The issue of consolidated SCN remains open and subject to final decision in W.P.(C) 4392/2025, which will bind future proceedings.

• Observations made in this order shall not prejudice the petitioner’s case in appeal.

Between Fine Lines:

• Courts disfavor writ jurisdiction where alternate remedy exists under GST Act.

• Allegations of ITC fraud are considered grave and fact-intensive, needing adjudication by appellate authorities.

• Consolidated SCNs across financial years may be contested, but only in appropriate forums.

• No relief was granted at writ stage, reinforcing that GST disputes must first exhaust statutory channels.

• Legal challenge on procedural irregularities remains viable in appeal.

Summary of Referred Cases:

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