Delhi High Court: Extraordinary Writ Jurisdiction Not Applicable In Findings Of Fake Input Tax Credit

Delhi High Court: Extraordinary Writ Jurisdiction Not Applicable In Findings Of Fake Input Tax Credit

Court said that it is settled law that a Petitioner who files a petition invoking the extraordinary writ jurisdiction has to come to Court with clean hands

The Delhi High Court dismissed a writ petition seeking a refund of ₹2,05,05,890 for the period of April 2020-May 2020 along with interest u/S 54(7) of the Central Goods and Services Tax Act, 2017 (CGST Act) since there were findings of fake Input Tax Credit against the Petitioner.

A Division Bench of the High Court of Delhi, comprising Justices Navin Chawla and Manmohan dealt with the matter titled M/s Ajanta Industries v Commissioner of Central Goods And Services Tax And Anr.

It was the case of the Petitioner that the Petitioner – Company was unable to discharge its GST liability in the third half of the year 2020-21 due to financial constraints. The Petitioner – Company submitted that it had duly filed all its returns up to April and May 2020 and it was entitled to refund within 60 days from the date of filing Form GST-RFD-01 u/S. 54(7) of the CGST Act. It was further contended by the Petitioner that it was mandatory to issue the acknowledgement in RFD-02 within 15 days and if not done, all further proceedings would be without jurisdiction, as per Rule 90 of Central Goods and Services Tax Rules. Therefore, the Petitioner submitted that the Respondent – Authority was bound to grant a refund to the Petitioner – Company.

The Court went through the order of the Respondent – Authority and found very serious findings of fake Input Tax Credit and other findings such as Petitioner's premises being found locked during inspection; the partner of the Petitioner not responding to the Summons, and suppliers having issued fake and bogus invoices.

The bench stated that it is settled law that a Petitioner who files a petition invoking the extraordinary writ jurisdiction has to come to Court with clean hands. It made the following observations while dealing with this issue:

"In commercial/appellate jurisdiction, a Court may have to grant relief if all the ingredients of a statutory provision are satisfied. But this is not so in a writ jurisdiction where relief may be denied to a petitioner on the ground that he has not approached the Court with clean hands, even when he satisfies all the ingredients of a statutory provision"

The Court opined it would inappropriate to entertain this writ petition, as the impugned order was an appealable order.

Therefore, the writ petition was dismissed by the Court with liberty to the Petitioner to avail the appellate remedy in accordance with the law.