May 16, 2025

NEW DELHI: Flagging concerns over the misuse of a Central Goods and Services Tax Act provision, Delhi high court has fined a private firm for fraudulently claiming input tax credit (ITC) to escape paying full GST. The court emphasized that such fraudulent practices could significantly damage the GST framework. The court highlighted the misuse of Section 16 of the CGST Act by companies and traders engaging in fraudulent activities. ITC allows entities to claim credit and deduct from payable GST on purchases of goods and services used in business transactions. The court observed that fake invoices were being used to make fraudulent claims, leading to the misuse of the facility. The court, exercising jurisdiction under Article 226 of the Constitution, imposed costs on the private entity for its involvement in creating fake invoices to evade GST liability.

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Tags: Gst, Delhi high court, Fraudulent claims, Tax credit, Cgst act,