Cause title — parties, addresses and appearances
W.P.(C) 10518/2025
Page 1 of 6
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IN THE HIGH COURT OF DELHI AT NEW DELHI
Date of decision: 31st July, 2025
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W.P.(C) 10518/2025 & CM APPL. 43634/2025
SARDAR AUTO TRADERS
.....Petitioner
Through:
Mr.
Wahaj
Ahmad
Khan,
Adv.
(M:9818503940)
versus
ADDITIONAL COMMISSIONER CGST WARD 32,
ZONE 1 AND ANR
.....Respondents
Through:
Mr
Aakarsh
Srivastava,
Senior
Standing Counsel with Mr. Anand
Pandey, Adv. (M: 9871094948)
CORAM:
JUSTICE PRATHIBA M. SINGH
JUSTICE SHAIL JAIN
Prathiba M. Singh, J. (Oral)
1.
This hearing has been done through hybrid mode.
2.
The present petition has been filed challenging the impugned order
dated 4th February, 2025 in Form GST DRC-07 for the assessment year 2017-
18 passed by the Respondent under the Central Goods and Services Act, 2017.
3.
The brief facts of the case are that the investigation in the present case
was initiated on the basis of a reference received from the Jaipur Zonal Unit
of Directorate General of GST Intelligence. During the course of the
investigation it was found that certain individuals are involved in creation of
non-operational or non-existent firms for fraudulent availment of Input Tax
Credit (hereinafter “ITC”). The Department had also investigated four entities
namely M/s Sahni Traders, M/s M.R. Enterprises, M/s S K Traders and M/s
Mahaveer Impex who were alleged to have passed on ITC to 76 recipients out
of which the Petitioner - M/s. Sardar Auto Traders was also found to be one
Digitally Signed
By:RAHUL
Signing Date:04.08.2025
15:07:04
Signature Not Verified
W.P.(C) 10518/2025
Page 2 of 6
of them. The total ITC in respect of the Central GST and State GST availed
by the Petitioner is stated to the tune of Rs.1,48,333/- (Rs.74,166/- +
Rs.74,166/-).
4.
A Show Cause Notice was issued to the Petitioner on 3rd August, 2024.
On 4th August, 2024, the Petitioner is stated to have filed a reply to the same.
Finally, the Order-in-Original dated 31st January, 2025 has been passed. In
terms of the said order, the total tax and demand raised against the Petitioner
is in the following effect:
“ORDER”
xxx
xxx
xxx
G)
The firms/company mentioned at serial no. 1 to
76 (recipients of the four firms M/s Sahni Traders, M/s
M.R. Enterprises, M/s S K Traders and M/s Mahaveer
Impex)
(i)
I confirm the demand of ITC amounts, availed
fraudulently by the company firms mentioned/listed in
following Table-Y, against their respective names,
without actual receipt of any supplies under section
74(9) of the CGST Act, 2017 read with correspondence
provision of SGST Act, 2017 and IGST Act, 2017:-
S.No.
GSTIN
/UIN
of
Recipi
ent
Trade
Name
IGST
CGST
SGST
G.
Total
ITC
xxx
xxx
xxx
xxx
xxx
xxx
xxx
47
07AA
CFS23
77L1Z
V
SARD
AR
AUTO
TRAD
0
74166
74166
14833
3
Digitally Signed
By:RAHUL
Signing Date:04.08.2025
15:07:04
Signature Not Verified
W.P.(C) 10518/2025
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ERS
5.
The said imposition of penalty is under challenge in this petition.
6.
Submission of the ld. Counsel for the Petitioner is that for the same
assessment year, the Delhi GST Department has also issued the notice and the
said notice has concluded in a final order. Hence, there cannot be duplication
of notice by the Central GST Department for the same period.
7.
Heard ld. Counsel for the parties and considered the documents placed
on record. The present is a case of notice being issued for fraudulent availment
of ITC by four suppliers and the Petitioner is one of the recipients of the said
suppliers. In the case of fraudulent availment of ITC, this Court has already
taken a view in W.P.(C) 5737/2025 titled Mukesh Kumar Garg vs. Union of
India & Ors. that ordinarily, the writ petition would not be maintainable. The
said observations are set out below:
“11.
In the opinion of the Court, since the present
matter relates to fraudulent availment of ITC and the
impugned order is an appealable order, the Petitioner firm
ought to avail of its appellate remedy. Further, the
grounds raised by the Petitioner can clearly be agitated
before the Appellate Authority. This view is also
supported by the decision of this Court in W.P.(C)
5737/2025 titled Mukesh Kumar Garg vs. Union of
India & Ors., wherein it is clearly held that in case of
fraudulent availment of ITC through bogus invoicing,
writ petitions ordinarily are not to be entertained. The
relevant findings are set out below:
“11. The Court has considered the matter under
Article 226 of the Constitution of India, which is an
exercise of extraordinary writ jurisdiction. The
allegations against the Petitioner in the impugned
order are extremely serious in nature. They reveal
Digitally Signed
By:RAHUL
Signing Date:04.08.2025
15:07:04
Signature Not Verified
W.P.(C) 10518/2025
Page 4 of 6
the complex maze of transactions, which are alleged
to have been carried out between various non-
existent firms for the sake of enabling fraudulent
availment of the ITC.
12. The entire concept of Input Tax Credit, as
recognized under Section 16 of the CGST Act is for
enabling businesses to get input tax on the goods and
services which are manufactured/supplied by them
in the chain of business transactions. The same is
meant as an incentive for businesses who need not
pay taxes on the inputs, which have already been
taxed at the source itself. The said facility, which was
introduced under Section 16 of the CGST Act is a
major feature of the GST regime, which is business
friendly and is meant to enable ease of doing
business.
13. It is observed by this Court in a large number of
writ petitions that this facility under Section 16 of the
CGST Act has been misused by various individuals,
firms, entities and companies to avail of ITC even
when the output tax is not deposited or when the
entities or individuals who had to deposit the output
tax are themselves found to be not existent. Such
misuse, if permitted to continue, would create an
enormous dent in the GST regime itself.
14. As is seen in the present case, the Petitioner and
his other family members are alleged to have
incorporated or floated various firms and businesses
only for the purposes of availing ITC without there
being any supply of goods or services. The impugned
order in question dated 30th January, 2025, which
is under challenge, is a detailed order which consists
of various facts as per the Department, which
resulted in the imposition of demands and penalties.
The demands and penalties have been imposed on a
Digitally Signed
By:RAHUL
Signing Date:04.08.2025
15:07:04
Signature Not Verified
W.P.(C) 10518/2025
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large number of firms and individuals, who were
connected in the entire maze and not just the
Petitioner.
15.The impugned order is an appealable order under Section 107 of the CGST Act. One of the co- noticees, who is also the son of the Petitioner i.e. Mr. Anuj Garg, has already appealed before the Appellate Authority.
16.Insofar as exercise of writ juri iction itself is concerned, it is the settled position that this juri iction ought not be exercised by the Court to support the unscrupulous litigants.
17.Moreover, when such transactions are entered into, a factual analysis would be required to be undertaken and the same cannot be decided in writ juri iction. The Court, in exercise of its writ juri iction, cannot adjudicate upon or ascertain the factual aspects pertaining to what was the role played by the Petitioner, whether the penalty imposed is justified or not, whether the same requires to be reduced proportionately in terms of the invoices raised by the Petitioner under his firm or whether penalty is liable to be imposed under Section 122(1) and Section 122(3) of the CGST Act.
18.The persons, who are involved in such transactions, cannot be allowed to try different remedies before different forums, inasmuch as the same would also result in multiplicity of litigation and could also lead to contradictory findings of different Forums, Tribunals and Courts.”
8.In view of the above, this Court is not inclined to entertain the present writ petition. In the opinion of the Court, since the present matter relates to fraudulent availment of ITC and the impugned order is an appealable order, W.P.(C) 10518/2025 the Petitioner firm ought to avail of its appellate remedy. Further, the grounds raised by the Petitioner can clearly be agitated before the Appellate Authority.
9.All the pleas and objections of the Petitioner are left open. In the appeal the Petitioner may raise the ground relating to overlapping demands, if any. However, considering the fact that the limitation for challenge may have expired, the time till 31st August, 2025 is granted to the Petitioner to file the appeal before the Appellate Tribunal along with pre-deposit. If the appeal is filed by 31st August, 2025, the same shall not be dismissed as being barred by limitation and shall be decided on merits.
10.The petition, along with pending applications, is disposed of in the above terms. PRATHIBA M. SINGH JUDGE SHAIL JAIN JUDGE JULY 31, 2025/dk/msh
