Radhey Traders Through Its Proprietor Sopal Singh Vs Assistant Commissioner (Delhi High Court)
GSTIN cancellation OTP shared with Accountant was misused later for creating Fake Firms; petition dismissed and assessee directed to avail alternate remedy
Conclusion: Writ petition filed in connection with the misuse of a Goods and Services Tax Identification Number (GSTIN) was dismissed as assessee could not claim to be completely innocent for sharing OTP with an accountant which was allegedly misused to create multiple fake firms. The giving of the OTP to a known person and subsequent misuse of the same, would require investigation by the police authorities.
Held: Assessee challenged two orders-in-original passed by the CGST officer. The first order dated 5 April 2024 confirmed a demand of ₹1.14 crore of allegedly ineligible Input Tax Credit (ITC), along with interest and penalty. The second order dated 27 August 2024 confirmed a demand exceeding ₹8.19 crore due to discrepancies between GSTR-1 and GSTR-3B filings, and ineligible ITC of about ₹19.55 lakh claimed on the strength of suppliers whose GSTINs had been retrospectively cancelled. Assessee contended that he had merely obtained GST registration in November 2018 but never commenced business operations. He claimed that his GSTIN was subsequently misused by third parties, leading to transactions worth over ₹50 crore in FY 2019-20. He argued that he had lodged police complaints, including FIR No. 0281/2024 and maintained that he was unaware of the show cause notice or subsequent orders. According to a Delhi Police status report, assessee freely gave an accountant he knew the OTP associated with his GST portal login in order to supposedly delete the registration, which was already suspended. Allegedly, this OTP was used to change the registered email address and mobile number, which led to the creation of seven companies that sent invoices and enabled false ITC claims totaling over ₹50 crore. Later, it was discovered that many of these businesses did not exist. It was held that claims to have gone to the GST Department to seek for suspension of the registration, which had already been suspended. Subsequently, assessee again himself gave the OTP from his mobile number to some third party. On the basis of the OTP which was given by assessee voluntarily to some third party, seven firms with the GST numbers had been created. The total availment of ITC was to the tune of more than Rs.50 crores. Under such circumstances, assessee could not claim to be completely innocent and prefer the present writ petitions challenging the impugned orders which had been passed. This Court also could not go into a factual inquiry in the matter as to who was responsible for the availment of the fraudulent ITC in this manner. The giving of the OTP to a known person and subsequent misuse of the same, would require investigation by the police authorities. The same could not be conducted by the Court – that too in a writ petition. The petition was dismissed directing an alternate remedy and noted that the investigation into the misuse of the GSTIN was already underway by the Police.
