A routine petition at the Delhi High Court turned into a major setback for a trader after judges found signs of fraudulent Input Tax Credit (ITC) claims running into lakhs. What began as a simple request to cancel a GST registration ended with the court imposing a hefty ₹5 lakh cost on the petitioner.
According to a report by Live Law, a division bench noted that the trader had attempted to mislead the court about the nature of his business. Of the ₹5 lakh penalty, ₹2 lakh will go to the Delhi High Court Bar Association, another ₹2 lakh to the GST Department, and ₹1 lakh to the Sales Tax Bar Association.
The trader had approached the court saying the GST Department was delaying the cancellation of his GST registration. However, the Department informed the court that the petitioner had recorded a turnover of more than ₹7 crore within six to seven months — and had not paid any GST in cash during that period. A field visit also suggested that the business did not exist at the registered address.
The petitioner denied this and submitted a short video claiming the shop was indeed rented to him and that no inspection had taken place. But things took a different turn when the court questioned him further.
As reported by Live Law, the proprietor — who appeared in person — admitted that he had installed the shop’s board just a day before the hearing, even though he had vacated the premises months earlier in July.
The court noted that the board seemed to have been put up only for recording the video. “The Petitioner has completely misled the Court about the nature of his business… The entire attempt appears to have been to somehow escape further legal action by the Department in respect of ITC which is stated to have been availed of from fraudulent entities,” the bench observed.
Calling the conduct “unacceptable”, the court dismissed the petition and asked the Department to take “severe action” against the trader.