KMG Industrial Traders Pvt. Ltd & Anr. Vs Additional Commissioner (Delhi High Court)
Delhi High Court has directed M/s KMG Industrial Traders Pvt. Ltd. to approach the Goods and Services Tax (GST) appellate authority to challenge a demand of INR 27.15 crores related to alleged fraudulent input tax credit (ITC) claims. The court’s order, issued on a writ petition, emphasizes that the appellate authority must adjudicate the matter on its merits, considering the petitioner’s submitted reply and other documents.
The case, KMG Industrial Traders Pvt. Ltd. & Anr. Vs. Additional Commissioner, arose from an Order-in-Original dated January 27, 2025, issued by the Principal Commissioner of Central GST, Delhi North. This order raised a significant demand against KMG Industrial Traders Pvt. Ltd. The Department’s primary allegation was that the petitioner firm had availed “fake” ITC from five other firms: M/s Delta Agrotech Pvt. Ltd., M/s Galux International, M/s Shriram Overseas, M/s Y. M. Foodways Pvt. Ltd., and M/s Sant Overseas. These allegations were based on the analysis of GST returns.
Mr. Jain, learned counsel representing the petitioner, presented a two-pronged argument before the High Court. Firstly, he contended that the Department had failed to consider the detailed reply filed by the petitioner on April 15, 2024. This reply was in response to a show cause notice (SCN-03/AKM/22-23) issued under Section 74 of the Central Goods and Service Tax Act, 2017, dated March 31, 2023. The non-consideration of the assessee’s response constitutes a potential violation of natural justice, as it implies a decision was made without fully reviewing the defense.
