GST Writ Dismissed with Exemplary Costs for Misleading Claims on ITC & Business Closure

Petitioner’s attempt to mislead Court on ITC transactions and business closure -Petition dismissed with heavy costs imposed

Delhi High Court dismissed a writ petition in case of M/s Shiva Enterprises v. Principal Commissioner, Department of Trade and Taxes seeking cancellation of GST registration after finding that the petitioner had attempted to mislead both the tax authorities and the Court by suppressing material facts relating to fraudulent Input Tax Credit (ITC) and misrepresenting the status of its business operations. The Court noted that although the petitioner claimed to have ceased business and filed NIL returns, substantial ITC had been availed without any corresponding cash GST payment, and the registered business premises were found to be non-existent. Video evidence and local inquiries revealed that a signboard was temporarily displayed only to create an appearance of compliance, while the business had vacated the premises much earlier. Holding such conduct to be a clear abuse of the judicial process, the Court refused to entertain the writ petition, permitted the department to continue proceedings, and imposed exemplary costs of ₹5 lakh. The ruling underscores that writ jurisdiction cannot be invoked to shield fraudulent conduct or obstruct statutory investigations under GST law.

Facts:

M/s Shiva Enterprises (“the Petitioner”) filed a petition seeking cancellation of its GST registration with effect from June 30, 2025.

The Principal Commissioner, Department of Trade and Taxes, GNCTD (“the Respondent”) issued a notice alleging the petitioner fraudulently availed ITC amounting to lakhs and that the business was substantial with turnover exceeding Rs.7 crores within a span of six to seven months.

The Petitioner contended that it sought cancellation after ceasing all business from July 4, 2025, had zero cash GST deposited, and filed NIL returns from July onwards.

The Respondent contended that the petitioner’s business premises were found non-existent at the registered address, with the board displayed only for the purpose of misleading inspections and that the business activity was falsely represented.

The Petitioner’s grievance was that since the GST department had not cited on its application for cancellation after request, the writ petition was filed to compel cancellation.

Issue:

Whether a writ petition seeking cancellation of GST registration can be entertained when the petitioner has (a) availed substantial ITC without paying any GST in cash, (b) filed NIL returns while claiming such ITC, and (c) misrepresented the existence and operations of its business before the tax authorities and the Court, warranting dismissal of the petition with costs and leaving the petitioner to face departmental proceedings?

Held:

The Hon’ble Delhi High Court in W.P.(C) 13977/2025 held as under:

• Observed that, the Petitioner’s premises were confirmed non-functioning, and no GST board was found at the registered address with local inquiries denying any such business existence.
• Noted that, the video evidence showed the board as recently put up solely for filming and the Petitioner had vacated months ago, thus misleading the Court and authorities.
• Held that, such conduct is blatant misrepresentation and cannot be condoned or allowed to escape legal scrutiny concerning ITC availed from questionable entities.
• Noted that, fresh notices had already been issued to the Petitioner, and directions were given for appearance before the department.
• Dismissed the writ petition and imposed costs of Rs. 5,00,000 payable partly to Bar Associations and the GST Department to compensate for misuse of judicial process and directed the costs to be deposited within two weeks and confirmed by the department.

Our Comments:

The judgment sternly condemns attempts to mislead the Court and tax authorities by manipulating business existence and records, emphasizing the importance of factual transparency in GST and ITC matters. It makes clear that the legal system will not tolerate obstructive or deceptive tactics aimed at frustrating revenue recovery or investigative processes.

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(Author can be reached at info@a2ztaxcorp.com)