The Delhi High Court has strongly criticized the growing misuse of its writ jurisdiction by entities involved in fraudulent Goods and Services Tax (GST) practices, particularly those claiming fake Input Tax Credit (ITC). The Court addressed a disturbing pattern where such parties seek judicial relief against penalty proceedings under Section 74 of the Central Goods and Services Tax (CGST) Act, 2017, based only on technical reasons.
A division bench of Justice Prathiba M. Singh and Justice Rajneesh Kumar Gupta stated:
“This Court also takes note, with some consternation, that such large scale fraudulent availment of ITC without actual passing of goods or services may, if left unchecked, can lead to severe damage to the GST framework itself, which is meant to encourage legally entitled persons and businesses to avail of ITC and other similar facilities such as drawbacks etc.”
The case involved M/S Mahesh Fabrinox Pvt. Ltd, which was penalized for issuing fake invoices through non-existent firms to illegally claim ITC. The firm approached the High Court challenging the penalty, arguing that its response to the show-cause notice had not been considered and that it was not granted a personal hearing.
However, the GST Department countered that three notices for hearings were issued, none of which were attended by the petitioner. The department also confirmed, via the official portal, that no reply had been submitted online by the petitioner.
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After reviewing the submissions, the Court emphasized the importance of maintaining judicial integrity:
“So long as there is no violation of natural justice or jurisdictional error, writ jurisdiction ought not to be exercised, especially if the Petitioner has not come with clean hands.”
The Court found no procedural irregularity or abuse of authority by the GST Department. It held that all legal requirements—including issuance of show cause notice and hearing opportunities—had been met.
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Consequently, the High Court dismissed the petition and imposed a cost of ₹1 lakh on the petitioner, directing that the amount be paid to the Delhi High Court Bar Association within two weeks.
“There is also no arbitrary exercise of power by the Department, which would require exercising of writ jurisdiction.”
Appearance in Court
- Petitioner: Mr. N.K. Sharma and Mr. Kapil Gautam
- Respondents: Ms. Neha Rastogi, SPC with Mr. Animesh Rastogi, Mr. Vibhav Singh, Mr. Shashank Pandey and Mr. Rajat Dubey
- CBIC: Mr. Akash Verma, Sr. Standing Counsel with Ms. Aanchal Uppal
Case Title: M/S Mahesh Fabrinox Pvt. Ltd v. Union of India
Case Number: W.P.(C) 6006/2025
