Gujarat High Court Rejects Writ Petition in ₹1.46 Crore Fake ITC Case — Advocate Found to Have Misled the Court

Case Reference

Mahalaxmi Industries Vs Union of India & Ors. (Gujarat High Court)

Background and Context

The Gujarat High Court recently dealt with a significant writ petition involving allegations of fraudulent Input Tax Credit (ITC) availment, wherein the conduct of the advocate representing the petitioner came under sharp judicial scrutiny. The case raises important questions about the maintainability of writ petitions when statutory appellate remedies remain available, and equally, about the professional obligations of advocates appearing before constitutional courts.

The petitioner, M/s Mahalaxmi Industries, operating from Shed No. B-30, Gopal Charan Industrial Globe, Kathwada, Daskroi, Ahmedabad, approached the Gujarat High Court challenging an Order-in-Original dated 23.03.2026 passed by the Assistant Commissioner of Central GST, Division-V (Odhav), Ahmedabad-South. The order was passed under Section 74 of the Central Goods and Services Tax Act, 2017 and confirmed a demand of ineligible ITC/tax amounting to ₹1,46,76,034, directed to be recovered from the petitioner.

The Show Cause Notice and Underlying Allegations

The roots of this litigation trace back to Show Cause Notice No. DGGI/AZU/Gr.B/36-548/2022-23 dated 10.06.2023, which was issued to the petitioner along with six other suppliers. The notice called upon all the addressees to explain why penalties should not be imposed under Section 74 and Section 122 of the CGST Act for allegedly availing fake ITC on the strength of invoices issued by Delhi-based non-existent firms.

The central allegation was that the petitioner and co-noticees had fraudulently claimed input tax credit based on invoices from firms that did not actually exist, thereby causing wrongful loss to the government exchequer.

The adjudicating authority, after due process, passed the Order-in-Original confirming the ineligible ITC demand and directing recovery of ₹1,46,76,034 from M/s Mahalaxmi Industries.

The Earlier Writ Petition — A Critical Parallel Proceeding

What made this case particularly noteworthy was the existence of a prior, closely related writ petition filed before the same court. M/s Mahalaxmi Metal Industries, operating from Shed No. B-23, Gopal Charan Industries Globe — notably just a few shed numbers away from the present petitioner — had earlier filed Special Civil Application No. 6227 of 2026, challenging an Order-in-Original dated 26.11.2025.

This earlier order had also emanated from the very same Show Cause Notice dated 10.06.2023 that formed the basis of the present petition. Crucially, that earlier writ petition had been withdrawn by the advocate, Mr. Gidwani, who represented M/s Mahalaxmi Metal Industries, with the stated intention of pursuing the statutory appellate remedy available under Section 107 of the CGST Act.

The same advocate, Mr. Gidwani, appeared for M/s Mahalaxmi Industries in the present petition as well.

The Disputed Assertion by the Advocate

When the present writ petition came up for hearing, the learned Senior Standing Counsel, Ms. Hetal Patel, raised a pointed objection. She brought to the Court's attention: