RS Trading Co Vs Principal Commissioner of CGST & Ors. (Delhi High Court)
The Delhi High Court noted that the petitioner’s GST registration was active for less than two financial years, during which all suspicious ITC transactions occurred. The judgment supports the GST Department’s contention that the entity may have been created to facilitate fraudulent ITC claims.
The Delhi High Court, in the case of RS Trading Co Vs Principal Commissioner of CGST & Ors., dismissed a writ petition challenging a massive GST demand and penalty raised against the petitioner for allegedly availing fraudulent Input Tax Credit (ITC) from non-existent suppliers. The Court directed the petitioner to pursue the statutory appellate remedy under Section 107 of the Central Goods and Service Tax (CGST) Act, 2017. Crucially, the High Court observed that the short lifespan of the petitioner’s GST registration—less than two financial years—provided a basis for the GST Department to believe that the firm was incorporated solely to engage in the fraudulent passing on of ineligible ITC.
The Allegation of Fraudulent ITC Availment
The petitioner, RS Trading Co., challenged an Order-in-Original (OIO) dated June 18, 2025, which confirmed a demand for ITC amounting to ₹6,27,82,280, along with equivalent interest and penalty, under Section 74(1) of the CGST Act. An additional penalty was also imposed under Section 122(1)(ii) for fraudulently availing and passing on ITC.
