Petitioner’s attempt to mislead Court on ITC transactions and business closure -Petition dismissed with heavy costs imposed

The Hon’ble Delhi High Court in the case of M/s. Shiva Enterprises Versus Principal Commissioner, Department of Trade And Taxes, GNCTD. - 2025 (11) TMI 241 - DELHI HIGH COURT held that the petitioner’s attempt to suppress facts regarding fraudulent Input Tax Credit (ITC) availed and misrepresentation of its business status is unacceptable and the writ petition seeking cancellation of GST registration is dismissed with costs, while permitting further proceedings by the department.

Facts:

M/s Shiva Enterprises (“the Petitioner”) filed a petition seeking cancellation of its GST registration with effect from June 30, 2025.

The Principal Commissioner, Department of Trade and Taxes, GNCTD (“the Respondent”) issued a notice alleging the petitioner fraudulently availed ITC amounting to lakhs and that the business was substantial with turnover exceeding Rs.7 crores within a span of six to seven months.

The Petitioner contended that it sought cancellation after ceasing all business from July 4, 2025, had zero cash GST deposited, and filed NIL returns from July onwards.

The Respondent contended that the petitioner’s business premises were found non-existent at the registered address, with the board displayed only for the purpose of misleading inspections and that the business activity was falsely represented.

The Petitioner’s grievance was that since the GST department had not cited on its application for cancellation after request, the writ petition was filed to compel cancellation.

Issue:

Whether a writ petition seeking cancellation of GST registration can be entertained when the petitioner has (a) availed substantial ITC without paying any GST in cash, (b) filed NIL returns while claiming such ITC, and (c) misrepresented the existence and operations of its business before the tax authorities and the Court, warranting dismissal of the petition with costs and leaving the petitioner to face departmental proceedings?

Held:

The Hon’ble Delhi High Court in M/s. Shiva Enterprises Versus Principal Commissioner, Department of Trade And Taxes, GNCTD. - 2025 (11) TMI 241 - DELHI HIGH COURT held as under:

• Observed that, the Petitioner’s premises were confirmed non-functioning, and no GST board was found at the registered address with local inquiries denying any such business existence.
• Noted that, the video evidence showed the board as recently put up solely for filming and the Petitioner had vacated months ago, thus misleading the Court and authorities.
• Held that, such conduct is blatant misrepresentation and cannot be condoned or allowed to escape legal scrutiny concerning ITC availed from questionable entities.
• Noted that, fresh notices had already been issued to the Petitioner, and directions were given for appearance before the department.
• Dismissed the writ petition and imposed costs of Rs. 5,00,000 payable partly to Bar Associations and the GST Department to compensate for misuse of judicial process and directed the costs to be deposited within two weeks and confirmed by the department.

Our Comments:

The judgment sternly condemns attempts to mislead the Court and tax authorities by manipulating business existence and records, emphasizing the importance of factual transparency in GST and ITC matters. It makes clear that the legal system will not tolerate obstructive or deceptive tactics aimed at frustrating revenue recovery or investigative processes.

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