Sardar Auto Traders Vs Additional Commissioner CGST Ward 32 (Delhi High Court)
Delhi High Court has dismissed a writ petition filed by Sardar Auto Traders, challenging an order that confirmed a tax demand of Rs. 1,48,333 for the fraudulent availment of Input Tax Credit (ITC) for the assessment year 2017-18. The court, citing its earlier judgment in Mukesh Kumar Garg vs. Union of India, held that writ petitions are ordinarily not maintainable in cases involving fraudulent ITC and that the petitioner should pursue the statutory appellate remedy.
The case originated from an investigation by the Directorate General of GST Intelligence, which found that several firms were created for the sole purpose of fraudulently availing and passing on ITC. Sardar Auto Traders was identified as one of 76 recipients of such alleged fraudulent ITC from four firms: M/s Sahni Traders, M/s M.R. Enterprises, M/s S K Traders, and M/s Mahaveer Impex.
The petitioner, Sardar Auto Traders, had challenged the order-in-original, which confirmed the tax demand, arguing that the notice was a duplication of one already issued by the Delhi GST Department for the same period. The court, however, focused on the nature of the allegations. It referred to its previous decision in Mukesh Kumar Garg, which highlighted the “extraordinary writ jurisdiction” of the court under Articles 226 and 227 of the Constitution of India and the serious nature of allegations involving fraudulent ITC. The court in the Mukesh Kumar Garg case had noted the misuse of the ITC facility under Section 16 of the CGST Act, where individuals and firms avail ITC without actual supply of goods or services, causing a “dent in the GST regime.”
