HC Upholds Penalty on GST Consultant for Aiding Fake ITC Claims

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  • Last Updated on 18 July, 2025

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Fake ITC Penalty

Case Details: Bhupender Kumar vs. Additional Commissioner Adjudication CGST Delhi North - [2025] 176 taxmann.com 356 (Delhi)

Judiciary and Counsel Details

  • Pratibha M. Singh & Rajneesh Kumar Gupta, JJ.
  • Abhishek Garg & Ranesh Singh Mankotia, Advs. for the Petitioner.
  • Monica Benjamin, SSC & Ms Nancy Jain, Adv. for the Respondent.

Facts of the Case

The petitioner in this matter was a GST consultant against whom a show cause notice was issued by the Directorate General of GST Intelligence (DGGI), alleging involvement in the creation of multiple fake firms for the fraudulent availment and passing on of input tax credit (ITC). It was alleged that the fake firms were operated by one Sehgal and his associates, and the petitioner was one of the consultants engaged by Sehgal who knowingly enabled the creation of these entities used for fraudulent ITC transactions. Penalty proceedings were initiated, and the petitioner was imposed penalties under Section 122(1A), Section 122(3) and Section 125 of the CGST Act. The petitioner challenged the imposition of penalties by filing a writ petition before the High Court. The matter was accordingly placed before the Delhi High Court.

High Court Held

The Delhi High Court held that the petitioner, being a GST consultant with prior experience in liaising with the Revenue Department, had knowingly enabled the creation of the fake firms and was fully aware that ITC was being fraudulently availed. The Court observed that the petitioner failed to rebut the allegations or establish that he did not derive any benefit from the fraudulent transactions. Accordingly, the penalties imposed under Sections 122(1A), 122(3), and 125 of the CGST Act were upheld. The Court further held that writ jurisdiction ought not to be exercised in such cases involving serious allegations of fraud and that the petitioner had an efficacious appellate remedy under Section 107 of the CGST Act. However, liberty was granted to the petitioner to avail the appellate remedy in accordance with law, notwithstanding the expiry of the limitation period.

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Author: Taxmann

Taxmann Publications has a dedicated in-house Research & Editorial Team. This team consists of a team of Chartered Accountants, Company Secretaries, and Lawyers. This team works under the guidance and supervision of editor-in-chief Mr Rakesh Bhargava.

The Research and Editorial Team is responsible for developing reliable and accurate content for the readers. The team follows the six-sigma approach to achieve the benchmark of zero error in its publications and research platforms. The team ensures that the following publication guidelines are thoroughly followed while developing the content:

  • The statutory material is obtained only from the authorized and reliable sources
  • All the latest developments in the judicial and legislative fields are covered
  • Prepare the analytical write-ups on current, controversial, and important issues to help the readers to understand the concept and its implications
  • Every content published by Taxmann is complete, accurate and lucid
  • All evidence-based statements are supported with proper reference to Section, Circular No., Notification No. or citations
  • The golden rules of grammar, style and consistency are thoroughly followed
  • Font and size that's easy to read and remain consistent across all imprint and digital publications are applied