HC Dismisses Writ as Assessee Involved in Fraudulent ITC via OTP

Case Details: Radhey Traders vs. Assistant Commissioner Laxmi Nagar Division CGST Delhi East Commissionerate - [2025] 177 taxmann.com 489 (Delhi)

Judiciary and Counsel Details

• Pratibha M. Singh & Shail Jain, JJ.
• Ankit Majumder & Puneet Kapoor, Advs. for the Petitioner
• Arun Khatri, SSC, Ms Anoushka Bhalla, Sahil Khurana, Akshay, Sainyam Bhardwaj, Ms Himanshi Singh, Ms Monalisha Pradhan, Advs. & Ms Arunima Dwivedi, CGSC for the Respondent

Facts of the Case

The petitioner’s registration under GST was subjected to proceedings on the ground of fraudulent availment of input tax credit (ITC). Orders were passed confirming demand of ineligible ITC along with additional tax liability arising from mismatch between Form GSTR-1 and Form GSTR-3B. The petitioner contended that his registration number had been misused by third parties and alleged that the sales shown in his returns were not genuine. He admitted to having shared one-time passwords (OTPs) from his mobile number with another person but claimed this was only for the limited purpose of suspension of registration. He argued that he was not directly responsible for the creation of multiple entities or the fraudulent availment of ITC and therefore challenged the impugned orders through a writ petition. The matter was accordingly placed before the High Court.

High Court Held

The High Court held that the writ petition was not maintainable in the facts of the case. It observed that on the basis of OTPs voluntarily provided by the petitioner, several firms had been created through which fraudulent ITC was availed. The Court found that the petitioner could not claim complete innocence after having facilitated the creation of such firms and that the writ jurisdiction could not be invoked to contest orders passed on the basis of such fraudulent activity. It held that a factual inquiry into the role of different persons in the fraudulent availment of ITC could only be undertaken by police authorities through proper investigation and not by the High Court in exercise of writ jurisdiction. Accordingly, the writ petition was dismissed.