Sheetal And Sons Vs Union of India & Anr. (Delhi High Court)
The Delhi High Court in Sheetal and Sons v. Union of India & Anr. (2025) addressed writ petitions challenging an Order-in-Original (OIO) issued under Sections 74 and 122 of the Central Goods and Services Tax Act, 2017 (CGST Act) concerning alleged fraudulent availment of Input Tax Credit (ITC) by trading firms. The petitions were filed by M/s Sheetal & Sons and M/s Vikas Traders, both managed by Mr. Sunny Jagga, against the imposition of tax demands and penalties pursuant to a Show Cause Notice (SCN) dated 24 May 2022.
Background
The Directorate General of GST Intelligence (DGGI) initiated an investigation into a network of firms allegedly generating fake invoices to fraudulently claim ITC without actual supply of goods. The firms under scrutiny included M/s S R Impex, M/s S R International, M/s R K Enterprises, M/s Vikas Impacts, and M/s SK Traders. The amount of ITC claimed fraudulently by these firms ranged from ₹2.82 crores to ₹50.66 crores.
In their statements before the Department, the petitioners acknowledged operating the two firms and managing day-to-day operations. They described themselves as traders of dry fruits, importing items like almonds, walnuts, and cloves for domestic sale. Mr. Jagga admitted issuing invoices to certain firms, including M/s Om Traders, M/s A.R. Traders, and M/s A.S. Traders, as per instructions from one Mr. Gopal Sharma, without personally visiting or verifying the premises of these firms. Subsequent DGGI investigation revealed these entities were non-existent. Mr. Jagga claimed he trusted Mr. Sharma and was unaware that the invoices were directed to fake entities.
