Mr. Rakesh Kumar, Adv v. COMMISSIONER OF CENTRAL GOODS AND SERVICES TAX

W.P.(C) 16349/2025 Page 1 of 10 $~48 * IN THE HIGH COURT OF DELHI AT NEW DELHI + W.P.(C) 16349/2025 & CM APPL. 66957/2025 SHRI SAI TRADERS THROUGH IT PROPRIETOR MR VIJAY KUMAR GUPTA .....Petitioner Through: Mr. Rakesh Kumar, Adv. versus COMMISSIONER OF CENTRAL GOODS AND SERVICES TAX .....Respondent Through: Mr. Anurag Ojha, SSC with Mr. Vipul Kumar & Mr. Dipak Raj, Advs. CORAM: JUSTICE PRATHIBA M. SINGH JUSTICE SHAIL JAIN O R D E R % 29.10.2025 1. This hearing has been done through hybrid mode. CM APPL. 66956/2025 (Exemption) 2. Allowed, subject to all just exceptions. Application stands disposed of. W.P.(C) 16349/2025 & CM APPL. 66957/2025 3. The present petition has been filed by the Petitioner under Article 226 of the Constitution of India, inter alia, challenging the Show Cause Notice dated 4th August, 2024 (hereinafter ‘impugned SCN’) and the demand order dated 03rd February, 2025 (hereinafter ‘impugned order’). 4. The case of the Petitioner is that it had filed a reply to the impugned SCN, however the same has not been considered by the Adjudicating Authority. Hence, the impugned order is alleged to be violative of the principles of natural justice. 5. Issue Notice. Mr. Anurag Ojha, ld. SSC who is present in the Court This is a digitally signed order. The authenticity of the order can be re-verified from Delhi High Court Order Portal by scanning the QR code shown above. The Order is downloaded from the DHC Server on 06/11/2025 at 13:12:11 W.P.(C) 16349/2025 Page 2 of 10 requested to accept notice. 6. A perusal of the impugned order would show that the same relates to fraudulent availment of Input Tax Credit (hereinafter ‘ITC’) by various parties. In fact one Mr. Adesh Jain, Proprietor of M/s MTR Distributor was found to be issuing invoices without actual supply of goods and passing on ITC to various firms. One of his accomplices was one Mr. Rajesh Jindal who is a resident of Rohini, Delhi. The various firms which were floated by these two individuals have also been mentioned in the impugned order. 7. The search operations and investigations have also been conducted against the Petitioner, the two individuals i.e., Mr. Adesh Jain and Mr. Rajesh Jindal, their premises and firms. Statements of the said persons were also recorded. The Petitioner is stated to be a bogus supplier from whom the supplies are claimed to be received by the said two individuals and their firms to the tune of Rs 1,51,33,185/-.The total fraudulent ITC which has been passed on is more than Rs 50 crores as per the impugned order. 8. The Petitioner’s case is that a reply was filed by the Petitioner but the same was not considered. 9. This Court has consistently taken the view thatin cases involving fraudulent availment of ITC, ordinarily, the Court would not be inclined to exercise its writ jurisdiction. It is routinely seen in such cases that there are complex transactions involved which require factual analysis and consideration of voluminous evidence, as also the detailed orders passed after investigation by the Department. In such cases, it would be necessary to consider the burden on the exchequer as also the nature of impact on the GST regime, and balance the same against the interest of the Petitioners, which is secured by availing the right to statutory appeal. This is a digitally signed order. The authenticity of the order can be re-verified from Delhi High Court Order Portal by scanning the QR code shown above. The Order is downloaded from the DHC Server on 06/11/2025 at 13:12:11 W.P.(C) 16349/2025 Page 3 of 10 10. It would be apposite to refer to some of the cases which have been decided by the Supreme Court as also by this Court on these aspects. The Supreme Court in the context of Central Goods and Service Tax Act, 2017, has, inCivil Appeal No. 5121/2021 dated 3rd September, 2021 titled ‘The Assistant Commissioner of State Tax & Ors. v. M/s Commercial Steel Limited’, has held as under: “11. The respondent had a statutory remedy under section 107. Instead of availing of the remedy, the respondent instituted a petition under Article 226. The existence of an alternate remedy is not an absolute bar to the maintainability of a writ petition under Article 226 of the Constitution. But a writ petition can be entertained in exceptional circumstances where there is: (i) a breach of fundamental rights; (ii) a violation of the principles of natural justice; (iii) an excess of jurisdiction; or (iv) a challenge to the vires of the statute or delegated legislation. 12. In the present case, none of the above exceptions was established. There was, in fact, no violation of the principles of natural justice since a notice was served on the person in charge of the conveyance. In this backdrop, it was not appropriate for the High Court to entertain a writ petition. The assessment of facts would have to be carried out by the appellate authority. As a matter of fact, the High Court has while doing this exercise proceeded on the basis of surmises. However, since we are inclined to relegate the respondent to the pursuit of the alternate statutory remedy under Section 107, this Court makes no observation on the merits of the case of the respondent. This is a digitally signed order. The authenticity of the order can be re-verified from Delhi High Court Order Portal by scanning the QR code shown above. The Order is downloaded from the DHC Server on 06/11/2025 at 13:12:11 W.P.(C) 16349/2025 Page 4 of 10 13. For the above reasons, we allow the appeal and set aside the impugned order of the High Court. The writ petition filed by the respondent shall stand dismissed. However, this shall not preclude the respondent from taking recourse to appropriate remedies which are available in terms of Section 107 of the CGST Act to pursue the grievance in regard to the action which has been adopted by the state in the present case” 11. Thereafter, this Court in W.P.(C) 5737/2025 titled Mukesh Kumar Garg v. Union of India & Ors. dealing with a similar case involving fraudulent availment of ITC had held as under: “11. The Court has considered the matter under Article 226 of the Constitution of India, which is an exercise of extraordinary writ jurisdiction. The allegations against the Petitioner in the impugned order are extremely serious in nature. They reveal the complex maze of transactions, which are alleged to have been carried out between various non-existent firms for the sake of enabling fraudulent availment of the ITC. 12. The entire concept of Input Tax Credit, as recognized under Section 16 of the CGST Act is for enabling businesses to get input tax on the goods and services which are manufactured/supplied by them in the chain of business transactions. The same is meant as an incentive for businesses who need not pay taxes on the inputs, which have already been taxed at the source itself. The said facility, which was introduced under Section 16 of the CGST Act is a major feature of the GST regime, which is business friendly and is meant to enable ease of doing business. This is a digitally signed order. The authenticity of the order can be re-verified from Delhi High Court Order Portal by scanning the QR code shown above. The Order is downloaded from the DHC Server on 06/11/2025 at 13:12:11 W.P.(C) 16349/2025 Page 5 of 10 13. It is observed by this Court in a large number of writ petitions that this facility under Section 16 of the CGST Act has been misused by various individuals, firms, entities and companies to avail of ITC even when the output tax is not deposited or when the entities or individuals who had to deposit the output tax are themselves found to be not existent. Such misuse, if permitted to continue, would create an enormous dent in the GST regime itself. 14. As is seen in the present case, the Petitioner and his other family members are alleged to have incorporated or floated various firms and businesses only for the purposes of availing ITC without there being any supply of goods or services. The impugned order in question dated 30th January, 2025, which is under challenge, is a detailed order which consists of various facts as per the Department, which resulted in the imposition of demands and penalties. The demands and penalties have been imposed on a large number of firms and individuals, who were connected in the entire maze and not just the Petitioner. 15. The impugned order is an appealable order under Section 107 of the CGST Act. One of the co-noticees, who is also the son of the Petitioner i.e. Mr. Anuj Garg, has already appealed before the Appellate Authority. 16. Insofar as exercise of writ jurisdiction itself is concerned, it is the settled position that this jurisdiction ought not be exercised by the Court to support the unscrupulous litigants. 17. Moreover, when such transactions are entered into, a factual analysis would be required to be This is a digitally signed order. The authenticity of the order can be re-verified from Delhi High Court Order Portal by scanning the QR code shown above. The Order is downloaded from the DHC Server on 06/11/2025 at 13:12:11 W.P.(C) 16349/2025 Page 6 of 10 undertaken and the same cannot be decided in writ jurisdiction. The Court, in exercise of its writ jurisdiction, cannot adjudicate upon or ascertain the factual aspects pertaining to what was the role played by the Petitioner, whether the penalty imposed is justified or not, whether the same requires to be reduced proportionately in terms of the invoices raised by the Petitioner under his firm or whether penalty is liable to be imposed under Section 122(1) and Section 122(3) of the CGST Act. 18. The persons, who are involved in such transactions, cannot be allowed to try different remedies before different forums, inasmuch as the same would also result in multiplicity of litigation and could also lead to contradictory findings of different Forums, Tribunals and Courts.” 12. This position was also followed in M/s Sheetal and Sons & Ors. v. Union of India &Anr., 2025: DHC: 4057-DB. The relevant portion of the said decision read as under: 15. The Supreme Court in the decision in Civil Appeal No 5121 of 2021 titled ‘The Assistant Commissioner of State Tax & Ors. v. M/s Commercial Steel Limited’ discussed the maintainability of a writ petition under Article226. In the said decision, the Supreme Court reiterated the position that existence of an alternative remedy is not absolute bar to the maintainability of a writ petition, however, a writ petition under Article 226 can only be filed under exceptional circumstances.... XXXX 16. In view of the fact that the impugned order is an appealable order and the principles laid down in the abovementioned decision i.e. The Assistant Commissioner of State Tax & Ors. (Supra), the This is a digitally signed order. The authenticity of the order can be re-verified from Delhi High Court Order Portal by scanning the QR code shown above. The Order is downloaded from the DHC Server on 06/11/2025 at 13:12:11 W.P.(C) 16349/2025 Page 7 of 10 Petitioners are relegated to avail of the appellate remedy.” 13. Recently, this Court in W.P.(C) 5815/2025titled M/s MHJ Metal Techs v. Central Goods and Services Tax Delhi South held as under: “16. This Court, while deciding the above stated matter, has held that where cases involving fraudulent availment of ITC are concerned, considering the burden on the exchequer and the nature of impact on the GST regime, writ jurisdiction ought not to be exercised in such cases. The relevant portions of the said judgment are set out below: “11. The Court has considered the matter under Article 226 of the Constitution of India, which is an exercise of extraordinary writ jurisdiction. The allegations against the Petitioner in the impugned order are extremely serious in nature. They reveal the complex maze of transactions, which are alleged to have been carried out between various non-existent firms for the sake of enabling fraudulent availment of the ITC. 12. The entire concept of Input Tax Credit, as recognized under Section 16 of the CGST Act is for enabling businesses to get input tax on the goods and services which are manufactured/supplied by them in the chain of business transactions. The same is meant as an incentive for businesses who need not pay taxes on the inputs, which have already been taxed at the source itself. The said facility, which was introduced under Section 16 of the CGST Act is a major feature of the GST regime, which is business friendly and is meant to enable ease of doing business. This is a digitally signed order. The authenticity of the order can be re-verified from Delhi High Court Order Portal by scanning the QR code shown above. The Order is downloaded from the DHC Server on 06/11/2025 at 13:12:11 W.P.(C) 16349/2025 Page 8 of 10 13. It is observed by this Court in a large number of writ petitions that this facility under Section 16 of the CGST Act has been misused by various individuals, firms, entities and companies to avail of ITC even when the output tax is not deposited or when the entities or individuals who had to deposit the output tax are themselves found to be not existent. Such misuse, if permitted to continue, would create an enormous dent in the GST regime itself. 14. As is seen in the present case, the Petitioner and his other family members are alleged to have incorporated or floated various firms and businesses only for the purposes of availing ITC without there being any supply of goods or services. The impugned order in question dated 30th January, 2025, which is under challenge, is a detailed order which consists of various facts as per the Department, which resulted in the imposition of demands and penalties. The demands and penalties have been imposed on a large number of firms and individuals, who were connected in the entire maze and not just the Petitioner. 15. The impugned order is an appealable order under Section 107 of the CGST Act. One of the co-noticees, who is also the son of the Petitioner i.e. Mr. Anuj Garg, has already appealed before the Appellate Authority. 16. Insofar as exercise of writ jurisdiction itself is concerned, it is the settled position that this jurisdiction ought not be exercised by the Court to support the unscrupulous litigants. 17. Moreover, when such transactions are This is a digitally signed order. The authenticity of the order can be re-verified from Delhi High Court Order Portal by scanning the QR code shown above. The Order is downloaded from the DHC Server on 06/11/2025 at 13:12:11 W.P.(C) 16349/2025 Page 9 of 10 entered into, a factual analysis would be required to be undertaken and the same cannot be decided in writ jurisdiction. The Court, in exercise of its writ jurisdiction, cannot adjudicate upon or ascertain the factual aspects pertaining to what was the role played by the Petitioner, whether the penalty imposed is justified or not, whether the same requires to be reduced proportionately in terms of the invoices raised by the Petitioner under his firm or whether penalty is liable to be imposed under Section 122(1) and Section 122(3) of the CGST Act. 18. The persons, who are involved in such transactions, cannot be allowed to try different remedies before different forums, inasmuch as the same would also result in multiplicity of litigation and could also lead to contradictory findings of different Forums, Tribunals and Courts.” 17. Under these circumstances, this Court is not inclined to entertain the present writ petition. However, the Petitioners are granted the liberty to file an appeal. 18. Accordingly, the Petitioners are permitted to avail of the appellate remedy under Section 107 of the CGST Act, by 15th July, 2025, along with the necessary pre-deposit mandated, in which case the appeal shall be adjudicated on merits and shall not be dismissed on the ground of limitation. 19. Needless to add, any observations made by this Court would not have any impact on the final adjudication by the appellate authority.” 14. The decision in Metal Techs (supra) has also been carried to the This is a digitally signed order. The authenticity of the order can be re-verified from Delhi High Court Order Portal by scanning the QR code shown above. The Order is downloaded from the DHC Server on 06/11/2025 at 13:12:11 W.P.(C) 16349/2025 Page 10 of 10 Supreme Court in SLP(C) 27411/2025 titled M/S Metal Techs v. Central Goods and Services Tax Delhi South. In the said SLP, the Supreme Court vide order dated 22nd September, 2025 has merely extended the time for filing the appeal. 15. Considering the nature of allegations in the present case and that it is a case where a substantial amount of ITC has been availed of by the multiple parties, this Court is not inclined to entertain the present writ petition. However, since the impugned order is dated 03rd February, 2025 and there has been some delay, the Petitioner is permitted to approach the Appellate Authority, subject to pre-deposit of the amount in accordance with law. Accordingly, if the appeal is filed by 10th December, 2025, it shall not be dismissed on the ground of limitation and the same shall be adjudicated on merits. 16. Needless to add, this order shall not act as a precedent to any other parties who are noticees in the impugned SCN dated 04th August, 2024. 17. The present writ petition along with pending applications, if any, stands disposed of in the above terms. PRATHIBA M. SINGH, J. SHAIL JAIN, J. OCTOBER 29, 2025 Sk/ck