Samarth Traders And Anr Vs Assistant Commissioner of Central Tax (Delhi High Court)
The petition was filed under Article 226 of the Constitution challenging an Order-in-Original dated 21 January 2025 issued by the Assistant Commissioner of Central Tax, Division – Old Delhi, Commissionerate CGST Delhi North. The impugned order confirmed demands and penalties against the petitioner on the ground of wrongful availment of Input Tax Credit (ITC) under Section 74(1) of the CGST Act.
The order confirmed GST demand of Rs. 1,33,94,470/- (CGST and SGST equally) and ordered its recovery. Interest on the above amount was also confirmed under Section 50. The order further directed appropriation of the amount available in the petitioner’s bank accounts, which had been provisionally attached under Section 83. Additionally, a penalty of an equal amount was imposed under Section 74, while penalty under Section 137 was not imposed on the proprietor. A separate penalty of Rs. 50,000/- was imposed on the proprietor under Section 122(3).
The basis for these proceedings was an investigation conducted against M/s Ramesh & Co., during which DGGI searched the proprietor’s residence and allegedly discovered that the firm, along with two others—M/s Shiv Traders and M/s Laxmi Trading Co.—had passed on fraudulent ITC without actual supply of goods or services. The petitioner was identified as one of the recipients of such ITC. According to the impugned order, summons were issued to the petitioner, who allegedly did not cooperate, failed to provide documents sought, and did not appear to record a statement. The order records that the petitioner’s GSTR-2A reflected ITC received from the three firms, which were stated to be bogus or non-existent entities. The adjudicating authority concluded that these firms issued invoices without actual supply, enabling the petitioner to avail ITC on paper transactions without movement of goods. It was further stated that this allowed the petitioner to avoid making GST payments through cash for outward supplies.
