Writ petitions not to be entertained in cases of alleged fraudulent availment of ITC – Supreme Court dismissed SLP of the company
In a recent case, the Hon’ble Supreme Court dismissed Special Leave Petition (SLP) of the company alleged of fraudulent availment of ITC against the judgment of the Delhi High Court that 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
ABCAUS Case Law Citation:
4757 (2025) (09) abcaus.in SC
The GST Department found that one individual had allegedly orchestrated a network of various suppliers and got generated goods less invoices in order to fraudulently avail ITC. Accordingly, searches were conducted at various premises and goods were detained, including stationery, stamps etc.
The total allegation of Goods and Service Tax involved was more than Rs.155 crores and the ITC which was stated to have been passed on was to the tune of Rs.7.08 crores.
The Petitioner in the instant case was one of the various firms which were passed on the fake ITC using the alleged goods less invoices.
An SCN was issued to the Petitioners and a reply to the said SCN was filed by the Petitioner. Subsequently, the Petitioner also attended the personal hearing. Finally, the impugned order was passed wherein a demand had been raised against the Petitioners on the ground of availment of fraudulent Input Tax Credit.
Before the Hon’ble High Court, the allegation of the Petitioner was that the impugned order records that three hearings were granted to the Petitioners, however only one hearing was granted. It was also submitted that the relied upon documents (RUDs) which were given were not clear and they were illegible and hence there had been a violation of the principles of natural justice.
The Hon’ble High Court observed that apart from raising various technical objections, there was hardly any plea raised by the Petitioners in the reply on the main issue i.e. that the goods were in fact supplied and ITC was rightly availed.
The Court was of the opinion that RUDs are collected by the Department from various firms under investigation and whatever documents are available with the Department is what is collected from these firms and therefore, the Department cannot be expected to supply re-typed copies of the RUDs, considering that this could be extremely bulky in nature.
On the issue of personal hearings, the Hon’ble High Court held that mere plea by the Petitioners that the opportunity for three hearings were not given cannot be accepted by the Court when admittedly one of the hearings was in fact attended by the Petitioners.
The Hon’ble High Court observed that a perusal of Section 75(5) of the Central Goods and Service Tax Act, 2017 (CGST Act), shows that it merely provides that no more than three adjournments can be granted for personal hearing. Thus, so long as a proper hearing has been granted by the Department, there cannot be any allegation of violation of the principles of natural justice. Moreover, it is a usual practice that whenever the SCN is issued by the Department, three dates of hearing are mentioned at the end of the show cause notice itself.
The Hon’ble High Court further opined that the impugned order was an appealable order under Section 107 of the CGST Act. The contentions that the Petitioners wish to raise can always be raised in appeal.
It was noted that the Court while deciding a similar matter, had 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.
As a result, the Petitioners were permitted to avail of the appellate remedy under Section 107 of the CGST Act along with the necessary pre-deposit mandated.
Not satisfied with the order of the Hon’ble High Court, the Petitiiner challenged it before the Hon’ble Supreme Court.
However, the Apex Court dismissed the Special Leave Petition (SLP) observing as under,
“Having heard learned counsel for the petitioner, we are not satisfied that it is a fit case to exercise our discretion under Article 136 of the Constitution of India. The present petition is, accordingly, dismissed.”
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