Metal Techs Vs Central Goods And Services Tax Delhi South (Supreme Court of India)
The petitions before the Delhi High Court were filed under Article 226 challenging a demand order dated 3 February 2025 alleging fraudulent availment of Input Tax Credit (ITC). The show cause notice (SCN) issued on 1 August 2024 alleged that an individual, Mohit Jain, orchestrated a network of suppliers and generated goods-less invoices to fraudulently pass ITC to several firms, including the petitioners. Searches were conducted and goods such as stationery and stamps were detained. The alleged GST involved exceeded ₹155 crore, and ITC passed on was around ₹7.08 crore. The petitioners submitted a reply and attended one personal hearing on 3 January 2025.
Read HC Judgment: Delhi HC dismisses Writ Petition Over Fraudulent ITC Allegations
The petitioners argued before the High Court that although the impugned order recorded that three hearings were granted, only one was actually provided, and that the relied-upon documents (RUDs) were illegible, amounting to breach of natural justice. The Court, however, noted that the petitioners’ reply dated 6 January 2025 did not address the substantive issue of actual supply of goods or correctness of ITC availed. On the grievance regarding unclear RUDs, the Court held that documents collected during investigation cannot be expected to be retyped merely for clarity. Regarding the opportunity of hearing, the Court observed that the petitioners had admittedly attended one hearing, and the impugned order showed that notices for three hearings were issued. It is also standard departmental practice for SCNs to specify multiple dates to avoid repeated adjournments, consistent with Section 75(5) of the CGST Act, which limits adjournments but does not mandate three hearings.
The High Court highlighted that 146 entities were involved and many did not file replies, and that large-scale fraudulent ITC matters require detailed factual examination not suited for writ jurisdiction. Relying on its earlier decision in Mukesh Kumar Garg v. Union of India, the Court reiterated that writ jurisdiction should not be used in complex ITC fraud cases due to their significant impact on the GST regime and the need for fact-finding, which is more appropriate for appellate forums. The Court also emphasised that the impugned order was appealable under Section 107 of the CGST Act, and that co-noticees had already availed appellate remedies.
Accordingly, the High Court declined to entertain the writ petitions but permitted the petitioners to file an appeal under Section 107 by 15 July 2025, along with the mandatory pre-deposit. It directed that such appeal shall be adjudicated on merits and not dismissed on limitation, and clarified that no observation of the Court should influence the appellate authority’s decision.
The matter then reached the Supreme Court. After hearing the petitioner, the Supreme Court declined to exercise its discretionary jurisdiction under Article 136, holding that it was not a fit case for intervention. The Court dismissed the petition but extended the High Court’s timeline for filing the appeal under Section 107 from 15 July 2025 to 15 October 2025. All pending applications were also disposed of. By doing so, the Supreme Court affirmed the High Court’s approach of requiring the petitioner to pursue the statutory remedy and allowed additional time for such appeal.
FULL TEXT OF THE SUPREME COURT JUDGMENT/ORDER
