MS RS Trading Co Vs Principal Commissioner of CGST & Ors. (Delhi High Court)
The Delhi High Court heard a writ petition filed under Article 226 of the Constitution challenging the Order-in-Original dated 18th June 2025 and the Show Cause Notice dated 31st March 2023 issued by the Additional Commissioner, CGST, North Delhi. The petitioner sought relief against the tax demand and penalties imposed under the Central Goods and Services Tax Act, 2017 (“the Act”).
As per the Order-in-Original, a demand of ₹6,27,82,280 in Input Tax Credit (ITC) was confirmed against the petitioner under Section 74(1) of the CGST/SGST Act read with Section 20 of the IGST Act. Interest under Section 50 was also ordered to be recovered. Additionally, penalties equivalent to the confirmed demand and to the total amount of fraudulently availed and passed-on ITC were imposed under Sections 74(1) and 122(1)(ii), along with a separate penalty of ₹10,000 under Section 122(1)(x).
The GST Department alleged that the petitioner had availed fraudulent ITC based on fake invoices issued by non-existent firms. Investigations revealed that 17 supplier firms linked to the petitioner were fake and their GST registrations had been cancelled. The total ITC availed was stated to be ₹7,96,55,413. Searches were conducted at the petitioner’s premises, and statements were recorded from the proprietor and third parties. In his initial statement, the proprietor admitted that he did not know the firms and had operated through brokers. The statements were later retracted. The proprietor was arrested on 4th March 2021 under Section 69 of the Act for alleged offences under Sections 132(1)(b) and 132(1)(c).
