Preeti Khanna Vs Additional Commissioner of Central Goods and Services Tax Delhi North & Anr (Delhi High Court)
Delhi High Court has dismissed a writ petition filed by Preeti Khanna, proprietor of M/s. Hiya Sales Corporation, challenging an order that raised a demand for wrongful availment of Input Tax Credit (ITC). The court distinguished the current show cause notice (SCN) from a previous one, stating that the second notice pertains to a broader network of fraudulent ITC claims, not merely a single transaction. The court advised the petitioner to pursue the appellate remedy available under the Central Goods and Services Tax (CGST) Act, 2017.
The petitioner had approached the High Court under Articles 226 and 227 of the Constitution of India, seeking to quash an order dated February 1, 2025, which confirmed a demand against her for ineligible ITC.
The background to the case involves a show cause notice issued on July 13, 2024, to 650 parties. This notice alleged that M/s Marabha Overseas Pvt. Ltd. had engaged in overvaluation of goods to claim export incentives. A connected entity, M/s. Dev Sales Corporation, was also under investigation. A search warrant for M/s. Dev Sales Corporation’s registered address could not be executed as the firm was not operating there. Further analysis of its PAN, mobile numbers, and email IDs revealed that 160 firms were registered using the same contact details on the GST portal. These 160 firms were found to have issued “good-less invoices” with a collective taxable value of Rs. 8393 Crores, leading to ineligible ITC amounting to Rs. 1025.51 Crores. This indicated a widespread network of fake or non-existent firms facilitating fraudulent ITC availment.
