Cause title — parties, addresses and appearances
W.P.(C) 7186/2025
Page 1 of 7
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IN THE HIGH COURT OF DELHI AT NEW DELHI
Date of decision: 26th May, 2025
+
W.P.(C) 7186/2025 & CM APPL. 32365/2025 & CM APPL.
32366/2025
STANDARD CARTONS PVT LTD
.....Petitioner
Through:
Ms. Shivani Sethi, Adv.
versus
OFFICE OF THE COMMISSIONER CENTRAL TAX DELHI
WEST AND ORS
.....Respondents
Through:
Mr
Shlok
Chandra,
Sr
Standing
Counsel with Mr. Ujjwal Jain, Mr.
Dhanunjay, Advs. for R-1&2.
Mr. Ruchesh Sinha, SSC.
CORAM:
JUSTICE PRATHIBA M. SINGH
JUSTICE RAJNEESH KUMAR GUPTA
Prathiba M. Singh, J. (Oral)
1.
This hearing has been done through hybrid mode.
CM APPL. 32366/2025 (for exemption)
2.
Allowed, subject to all just exceptions. Application is disposed of.
W.P.(C) 7186/2025 & CM APPL. 32365/2025
3.
The present petition has been filed under Articles 226 and 227 of the
Constitution of India challenging the impugned order dated 31st January, 2025
(hereinafter, ‘impugned order’) whereby a penalty has been imposed upon
the Petitioner in the following terms:
“xii. a) I impose penalty of Rs.1,03,80,024/- upon M/s
Standard Cartons Pvt Ltd (GSTIN07AAECS1153P1Z3),
B-101, Okhla Industrial Area, Phase-1, South Delhi,
Delhi- 110020 under Section 122(1)(vii) along with
Digitally Signed
By:KESHAV
Signing Date:28.05.2025
12:21:33
Signature Not Verified
W.P.(C) 7186/2025
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Section 122(2)(b) of the CGST Act, 2017 read with the
corresponding provisions of the SGST Act, 2017 and
Section 20 of the IGST Act, 2017 for receiving invoices or
bills without actual supply of goods or services from the
firms of Late Mrs. Aaurti Kapoor in violation of the
provisions of this Act or Rules made thereunder.
b) I impose penalty of Rs.1,03,80,024/- each upon Shri
Vinod Pahwa and Shri Deepak Pahwa under Section
122(I)(vii) along with Section 122(2)(b) of the CGST
Act, 2017 read with the corresponding provisions of the
SGST Act, 2017 and Section 20 of the IGST Act, 2017
taking benefit of the receipt of ITC fraudulently on the
basis of the invoices or bills procured without supply of
goods or services from the firms of Late Mrs. Aaurti
Kapoor.”
4.
This is the second writ petition being filed by the Petitioner. The
impugned order herein arises out of a show cause notice dated 2nd August,
2024
(hereinafter, ‘SCN’) which was addressed to several noticees and
allegations of fake availment of Input Tax Credit (ITC) were raised therein.
5.
A perusal of the impugned order would show that the Petitioner is
alleged to have received goods-less invoices from two firms, namely M/s.
Shivaay Trading and Satyam Associates, which are firms stated to be
belonging to Mrs. Aaurti Kapoor. The total availment of Input Tax Credit
(hereinafter, ‘ITC’) is alleged to be to the tune of Rs. 172 Crores through the
fake and fraudulent firms and goods-less invoices.
6.
The impugned order further shows that there are 34 parties to whom
SCN has been issued. In the impugned order itself, the allegation is that one
Mrs. Aaurti Kapoor, who is connected to all these firms had passed on the
ITC to various entities, such as the Petitioner.
7.
The submission made today by the ld. Counsel for Petitioner is that
Digitally Signed
By:KESHAV
Signing Date:28.05.2025
12:21:33
Signature Not Verified
W.P.(C) 7186/2025
Page 3 of 7
despite the directions for furnishing the Relied Upon Documents (hereinafter,
‘RUDs’), the same were not furnished to the Petitioner until the filing of a
contempt petition. It is further submitted that in the RUDs, the statement of
one Mr. Vinod Pahwa would show that he does not have any connection with
the Petitioner. Thus, there is no document which connects the Petitioner to
Mr. Vinod Pahwa or to Mrs. Aaurti Kapoor. Ld. Counsel for the Petitioner,
therefore, submits that the order deserves to be quashed.
8.
On the other hand, ld. Counsel for the Respondent-Department has
pointed out that the GSTR-1M of the various firms of Mrs. Aaurti Kapoor
would show that the said firms had made outwards supplies by issuing mere
invoices without any supply of goods, only to pass on the ITC.
9.
One such firm is M/s Satyam Associates which had raised an invoice
on Standard Cartons Pvt. Ltd. at B-101, Okhla Industrial Area, Phase-1,
Delhi-110020 for a taxable value of Rs.5,76,66,800/- with CGST of
Rs.51,90,012 and SGST of Rs.51,90,012, totalling to Rs.1,03,80,024/-. It is
noted that the address of the Petitioner is the same as in the memo of parties
i.e., B-101, Okhla Industrial Area, Phase-1, Delhi-110020,
10.
In view of this, this Court is of the opinion that the question as to
whether there is a connection between the Petitioner and Mrs. Aaurti Kapoor
or her firms, would be a factual issue. Moreover, after delivery of the SCN,
the Petitioner chose not file any reply on merits. It had filed a writ petition
before this Court being W.P.(C) 15360/2024 in which the SCN was
challenged and the following order was passed on 4th November, 2024:
“W.P.(C) 15360/2024
1. In the absence of any jurisdictional challenge which
stands mounted to the Show Cause Notice [“SCN”], we
find no justification to interfere with those proceedings
Digitally Signed
By:KESHAV
Signing Date:28.05.2025
12:21:33
Signature Not Verified
W.P.(C) 7186/2025
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as initiated.
2. The only other grievance which is raised is that the
documents which had been relied upon have not been
provided to the writ petitioner and thus, constraining
his right to file an effective response to the impugned
SCN.
3. The said grievance may be duly examined by the
concerned respondent with it being ensured that all the
documents relied upon are duly provided to the writ
petitioner.
4. Subject to the aforesaid observation, this writ petition
stands disposed of.”
11.
The grievance of the Petitioner is that despite this order dated 4th
November, 2024, the RUDs were not supplied to the Petitioner and the same
were furnished only on 14th May, 2025.
12.
In the opinion of this Court, the Petitioner has all along been aware of
the proceedings before the Adjudicating Authority. The same SCN dated 2nd
August, 2024 was challenged by one M/s SS Enterprises in petition being
W.P.(C) 5684/2025 in which the Petitioner therein was relegated to avail of
the appellate remedy in accordance with law.
13.
The contentions that the Petitioner wishes to raise can always be raised
in appeal, in as much as this Court has already taken a view in W.P.(C)
5737/2025 titled Mukesh Kumar Garg vs. Union of India & Ors. that where
cases involving fraudulent availment of ITC are concerned, considering the
burden on the exchequer and the nature of impact on the GST regime, writ
jurisdiction ought not to be ordinarily exercised in such cases. The relevant
portions of the said judgment 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
Digitally Signed
By:KESHAV
Signing Date:28.05.2025
12:21:33
Signature Not Verified
W.P.(C) 7186/2025
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allegations against the Petitioner in the impugned
order are extremely serious in nature. They reveal
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
Digitally Signed
By:KESHAV
Signing Date:28.05.2025
12:21:33
Signature Not Verified
W.P.(C) 7186/2025
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demands and penalties. The demands and penalties
have been imposed on a large number of firms and
individuals, who were connected in the entire maze
and not just the Petitioner.
