M/S Metal Techs (Through Its Karta Sh. Mohit Jain) vs. Central Goods And Services Tax Delhi South
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The petitioners, M/s MHJ Metaltechs Private Limited and M/s Metal Techs, filed writ petitions challenging an order dated 03rd February, 2025, which raised a demand for allegedly fraudulent Input Tax Credit (ITC) availment. The revenue alleged that an individual, Sh. Mohit Jain, orchestrated a network of suppliers to generate goods-less invoices for fraudulent ITC. Searches were conducted, and goods were detained. The petitioners were among the firms alleged to have received ITC through these purported goods-less invoices. The total GST involved was over Rs. 155 crores, with ITC passed on to the tune of Rs. 7.08 crores. The petitioners received a show cause notice on 01st August, 2024, filed a reply, and attended a personal hearing on 03rd January, 2025.
Held
The Court held that the allegation of denial of sufficient personal hearings was not accepted, as the petitioners admittedly attended one hearing on 03rd January, 2025. The impugned order itself recorded that hearings were scheduled on 05.11.2024, 18.12.2024, and 03.01.2025, and that opportunities were granted. The Court also found that Section 75(5) of the CGST Act limits adjournments to three, and a proper hearing having been granted negates the violation of natural justice. Regarding the RUDs, the Court opined that the department could not be expected to supply re-typed copies of bulky documents collected from various firms. Crucially, the Court held that the impugned order is appealable under Section 107 of the CGST Act. Citing its own precedent in W.P.(C) 5737/2025 (Mukesh Kumar Garg vs. Union of India & Ors.), the Court reiterated that in cases involving fraudulent availment of ITC, writ jurisdiction ought not to be exercised due to the burden on the exchequer and the impact on the GST regime. Such factual analyses are best undertaken in appeal. The ratio is that extraordinary writ jurisdiction should not be used to support unscrupulous litigants, especially when a statutory appellate remedy exists for complex factual disputes like fraudulent ITC availment.
Key Issues
1. Whether the impugned order is vitiated by a violation of the principles of natural justice due to the alleged denial of sufficient personal hearings and the provision of illegible relied-upon documents (RUDs)? (Question of mixed law and fact, concerning principles of natural justice and procedural fairness under the CGST Act). The petitioner argued that only one hearing was granted, not three as stated in the order, and that the RUDs provided were illegible, violating natural justice. The revenue contended that sufficient opportunities were granted, and the department could not be expected to provide re-typed RUDs as they were collected from various investigated firms. 2. Whether the writ jurisdiction of this Court should be exercised in cases involving alleged fraudulent availment of ITC, considering the availability of an alternative appellate remedy? (Question of law, concerning the scope of Article 226 of the Constitution of India and Section 107 of the CGST Act). The petitioner sought to challenge the order directly. The revenue implicitly relied on the existence of the appellate remedy under Section 107 of the CGST Act.
Sections Cited
Section 75(5), Section 107, Section 16, Section 122(1), Section 122(3)
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Heard together (2 matters)
Read from the judgment's own cause title. This page is filed under one of them.
Cause title — parties, addresses and appearances
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.
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.
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.
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.”
Under these circumstances, this Court is not inclined to entertain the W.Ps.(C) 5771/2025 & 5815/2025 present writ petition. However, the Petitioners are granted the liberty to file an appeal.
Accordingly, the Petitioners are permitted to avail of the appellate remedy under Section 107 of the CGST Act, by 15th July, 2025, along with the necessary pre-deposit mandated, in which case the appeal shall be adjudicated on merits and shall not be dismissed on the ground of limitation.
Needless to add, any observations made by this Court would not have any impact on the final adjudication by the appellate authority.
The petitions are disposed of in said terms. Pending application(s), if any, also stand disposed of. PRATHIBA M. SINGH JUDGE RAJNEESH KUMAR GUPTA JUDGE MAY 22, 2025 v/ss
Reproduced from the public record of the Delhi High Court. Verify against the court's own copy before relying on it. Income tax judgments are on bharattax.net.