Delhi High Court Denies Relief To Firm Allegedly Involved In ₹550 Crore GST Fraud, Questions Its Conduct Before Dept

In doing so, a division bench of Justices Prathiba M. Singh and Rajneesh Kumar Gupta were unappreciative of the Petitioner's conduct in responding to the Department's proceedings.

A demand of over ₹550 crores has been raised from various firms including the Petitioner.

The case of the Department is that an investigation in respect of evasion of GST was conducted against 286 entities, including the Petitioner.

The modus operandi alleged is that the Petitioner was issuing bogus invoices to various firms, which were either nonexistent or non-operational, in respect of packaging material/laminates.

It was also alleged that the Petitioner's directors and promoters had themselves set up various other companies/firms, which were, in fact, being used to show sales in respect of bogus invoices.

Upon becoming aware of the investigation, the Petitioner is alleged to have filed bankruptcy in respect of the allegedly bogus companies/firms.

It is also alleged that Petitioner did not file any reply to the show cause notice and only when a hearing notice was issued, it first sought an extension, stayed quiet for more than three months and then belatedly sought documents relied upon by the Department which were already in its possession. Not stopping at that, it is alleged that the Petitioner chose to file a reply running into almost 3000 pages.

The High Court said,

“A perusal of the reply filed by the Petitioner, would show that the Petitioners all along had all the requisite information to reply to the SCN, however, it chose not to file the same for almost six months. It was only when the personal hearing notice was given, due to the imminent expiry of the limitation period for passing the order, that the Petitioners have chosen to file a reply. The Petitioner only then raised objections in respect of RUDs and non-grant of opportunity for cross-examination. The Petitioners have, clearly, not been diligent in this matter.”

Finally, noting that insolvency proceedings were fraudulently initiated by the Petitioner qua the companies from whom the recoveries were to be made by the Department, the Court said, “this is not a fit case for exercising extraordinary writ jurisdiction of this Court.”

Appearance: Mr. Tarun Gulati, Sr Adv. with Mr. R.P. Singh, Mr. Yash Aggarwal, Mr. Pramod Kandpal, Mr. Nirmal Dixit & Mr. Aman Sinha, Advs. for Petitioner; Mr. Anurag Ojha, SSC along with Mr. Shubham Kumar and Mr. Dipak Raj, Advs. for R-1 to 3.

Case title: M/S Montage Enterprises Private Limited (Through Its Authorized Representative Sanjay Kumar Singh) & Ors. v. Central Goods And Services Tax Delhi North & Ors.

Citation: 2025 LiveLaw (Del) 501

Case no.: W.P.(C) 4774/2025

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