“For startups and businesses, compliance is not a cost – it’s an investment in peace of mind.”

Delhi HC Denies Writ Relief for Penalty on Fraudulent ITC under Misused Second GSTIN

In a recent judgment (Laxmi Collection v. Additional Commissioner, Delhi – W.P.(C) 11092/2025, decided on 29-07-2025), the Delhi High Court dealt with fraudulent use of Input Tax Credit (ITC) under a second GSTIN and denied writ relief to the petitioner.

📌 Facts of the Case:

• Petitioner was allotted two GSTINs post-migration.

• A penalty was imposed for fraudulent ITC claimed under the second GSTIN.

• Petitioner argued that misuse was done by unknown persons.

• A police complaint was filed in 2019 but was not pursued seriously.

• The Department presented evidence that GSTIN allotment emails were received on petitioner’s registered email IDs, weakening the defence.

⚖️ Court’s Observations:

• Petitioner was negligent in preventing misuse of GST registration.

• Failed to challenge penalty within the prescribed time.

• The dispute required factual inquiry, unsuitable for writ jurisdiction under Article 226 of the Constitution.

🏛 Decision:

• Writ petition dismissed.

• Petitioner directed to pursue appeal under Section 107 of the CGST Act with mandatory pre-deposit by 31-08-2025.

💡 Key Lessons for Businesses & Startups:

1. Monitor your GSTINs actively – even unused registrations can be misused.

2. Timely action is critical – delay weakens your defence.

3. Writ jurisdiction is limited – factual disputes must go through proper appeals.

4. Compliance is non-negotiable – negligence can invite heavy penalties.

“When compliance is strong, the journey is smooth,

Negligence in law, removes every proof.

Guard your GST, your licenses, your right,

Stay vigilant always, to win the legal fight.”

📌 Disclaimer: The above article is intended for informational and educational purposes only. It should not be construed as legal or professional advice. For tailored guidance, consult your Chartered Accountant or legal advisor.