Delhi High Court Upholds Statutory Appeal Route in Rs. 64 Crore Fake ITC Case — Clarifies Scope of Appellate Powers Under Section 107 CGST Act
Background and Context
The Delhi High Court recently adjudicated upon a writ petition filed by DK Enterprises challenging a significant demand order passed under the Central Goods and Services Tax framework. The matter arose from an order dated 03.02.2025 issued by the Additional Commissioner (Adjudication), Central Goods and Services Tax, Delhi, which raised a demand of approximately Rs. 64 crores against the petitioner on allegations of wrongful availment of Input Tax Credit (ITC) through fake invoices.
This judgment carries particular significance for assessees who are aggrieved by adjudication orders under GST law and seek to bypass the statutory appellate mechanism by approaching the High Court directly under its writ jurisdiction.
Case Background: History of Prior Writ Petitions
Before the present writ petition came up for hearing, it is important to note that DK Enterprises had already approached the Delhi High Court on two prior occasions through separate writ petitions arising from the same underlying dispute. On both those occasions, the Court had declined to intervene and had directed the petitioner to avail the statutory remedy of appeal available under Section 107 of the Central Goods and Services Tax Act, 2017 (hereinafter referred to as the CGST Act).
Despite these earlier directions, the petitioner once again approached the High Court by way of the present writ petition, this time specifically challenging the order dated 03.02.2025, through which the Adjudicating Authority had confirmed that ITC was availed on the strength of fake invoices and raised the aforementioned demand.
Key Contentions Raised by the Petitioner
The senior counsel appearing on behalf of DK Enterprises advanced two principal arguments before the Court:
1. Limitation of Appellate Authority to Remand Matters
The petitioner's first argument rested on a reading of Section 107(11) of the CGST Act. It was argued that since the Appellate Authority does not possess the power to remand or refer the matter back to the Adjudicating Authority, the grievance regarding denial of cross-examination of witnesses — which occurred at the adjudication stage — could not be addressed or remedied at the appellate level. On this basis, the petitioner urged that the writ petition deserved to be entertained by the High Court.
2. Non-Consideration of Rs. 64 Crore Payment
The petitioner's senior counsel further submitted that DK Enterprises had already deposited a sum of Rs. 64 crores, and that this payment had not been appropriately taken into account or properly considered by the Adjudicating Authority while passing the impugned order.