Indo International Tobacco Ltd And Others vs. Shri Vivek Prasad, Additional Director General And Others
(Delhi High Court, Delhi)

Case Law
Petitioner / Applicant
Indo International Tobacco Ltd And Others
Shri Vivek Prasad, Additional Director General And Others
Delhi High Court
Oct 26, 2021
Order No.
CONT.CAS(C) 751/2021 & C.M.No.35806/2021, W.P.(C) 2420/2021, W.P.(C) 4036/2021 & C.M.No.12202/2021, W.P.(C) 5816/2021 & C.M.Nos.32633/2021, 37412/2021, 37406/2021
TR Citation
2021 (10) TR 4787
Related HSN Chapter/s
24 , 2403
Related HSN Code


1. The petitions have been heard by way of video conferencing.

2. Learned ASG has explained in detail the constitutional architecture of CGST Act, 2017, IGST Act 2017, SGST and UGST Acts as well as width, ambit and application of Section 6 of CGST and SGST Acts, appointment of Central Tax and State Tax officers. He further states that in the case of M/s M/s Indo International Tobacco Pvt. Ltd. being, WP(C) 2420/2021, the petitioner firm appears to be involved in availment and utilization of fake ITC of more than ₹ 100 crores, supply of low-grade tobacco products in the garb of “smoking mixture for pipes and cigarettes”, and overvaluation of its products to pass on huge fake ITC to certain entities, located all across Delhi NCR region, which are inter-connected and it is not possible for the jurisdictional CGST Commissionerate to carry out a thorough investigation due to its limited territorial jurisdiction. He has referred to thirteen investigations being carried out by different authorities as mentioned in the additional affidavit filed on behalf of respondents No. 1, 3, 4, 5, 6, 7 and 9. In particular, he has referred to the following investigations being carried out by DGGI, Ahmedabad Zonal Unit:-


Name of authority who conducted search

Date of search

Scope of investigation


DGGI, Ahmedabad Zonal Unit


During investigation of certain non-existent/non-functional firms, viz.

(1) Garuda Enterprise (GSTN- 06DWAPK45 10C 1Z6)

(2) Shiva Enterprise (GSTN-07BBHPS6200B 1Z1)

(3) Tirupati Exports (GSTN- 09CCIPP4229C1ZL)

(4) Paria Trading (GSTN-07AYGPH3832B1 ZV)

(5) Balaji Exports (GSTN-09FDZPP5520H1ZT)

(6) Royal Trading, Alwar (GSTN- 08DWAPK4510C1Z2)

(7) Mahadev World Trade, Alwar (GSTN- 08CAJPK8236P1ZX) etc. were identified by the DGGI, Ahmedabad Zonal Unit. It was found that “Smoking mixture for pipes and cigarettes” was one of the major items shown as supplied in the paper transactions by the nonexistent entities. The subject goods “Smoking Mixture for pipes and cigarettes”, a tobacco product falling under CTH 2403 19 10, is highly sensitive from tax evasion angle as it is subject to GST @ 28% and Compensation Cess @ 290% (Total 318%) and any fictitious paper transaction in “Smoking Mixture” is highly rewarding for availment of ITC unlawfully. The evidences available on record indicated a de-eprooted conspiracy by some persons who were the masterminds behind this modus operandi to defraud the public exchequer. Investigations also revealed that the petitioner firm M/s Mridul Tobie Inc, Noida is also one of the beneficiaries of fake ITC generated in the name of some of the nonexistent entities by paper transactions without corresponding supply of goods, including “smoking mixture for pipes and cigarettes”. Further, investigation also includes the issue of Overvaluation and Misclassification of the product by M/s Mridul Tobie Inc.

Remarks: During search operation, it was observed that the goods seized by the DGGI, Delhi Zonal Unit under panchanama dated 14.01.2021 were not available at the premises. This search was conducted by DGGI, Ahmedabad Zonal Unit with the help of DGGI, Delhi Zonal Unit so the officers of Delhi Zonal Unit were also present during the said search

3. Mr. Satish Kumar, learned counsel for Directorate General of Goods and Service Tax Intelligence in writ petition being SSM Exports vs. Commissioner of Central Excise and Service Tax and CGST Delhi West & Ors., WP(C) 4036/2021 states that domestic tariff area suppliers have shown supply of low valued tobacco and tobacco related products to certain SEZ units in Kandla, Special Economic Zone, at highly over-valued rates so as to avail ineligible refund of Input Tax Credit sourced fraudulently from many non-existent entities. The relevant portion of the counter affidavit, relied upon by him, is reproduced hereinbelow:-

“5.1 It is most respectfully submitted that specific intelligence was received by Directorate General of GST Intelligence, Ahmedabad Zonal Unit (hereinafter referred as ‘DGGI, AZU’ for sake of brevity) that certain entities based in Delhi NCR region of Domestic Tariff Area (hereinafter referred as ‘DTA’ for sake of brevity), had shown supply of low value tobacco and tobacco related products to certain SEZ units in Kandla Special Economic Zone (hereinafter referred to as ‘KASEZ’) at highly over valued rates so as to avail ineligible refund of Input Tax Credit (ITC) sourced fraudulently from many non-existent entities.

5.2 On the basis of the said information searches were carried out initially at the premises of M/ s Palmon Export (GSTIN- 24AAHFP4369G2Z3), M/ s Sugandha Exports (GSTIN- 24AJEPB3156B2ZZ) and M/s Shivam Betelnuts Pvt Ltd. (GSTIN- 24AAUCS0489A1Z9) on 18/ 19.09.2019, 24/25.09.2019 and 21.09.2019 respectively, all located in KASEZ and at the premises of certain Domestic Tariff Area suppliers. To verify the contents of intelligence, searches were also conducted at the premises of certain entities from whom these DTA suppliers had claimed to have purchased the goods. The action by the respondents taken initially is pictorially depicted as under:






Entities making supplies to Delhi NCR based suppliers

Supply to

Delhi NCR based suppliers

Supply to

SEZ units in Kandla

5.3 M/s SSM Exports, the petitioner firm, is one of such entities, depicted as ‘A’ having GSTIN 07 AERPG2791R2ZK, from whom certain DTA suppliers namely M/s. SH Exports (07AQIPG3048E1Z4), M/s. J J Dyeing Private Limited (09AADCJ8927H1Z6), M/s. Kumar Sales (09AYEPS1722R1ZS), M/s. Premier Solutions (07 AJMPB6556D3Z8) and M/s. Shriniwas Exports (07 AWBPK3048B2Z0) etc. have purchased, either directly or through intermediaries, the suspected low value tobacco and tobacco related products falling under HSN 2403. These DTA suppliers have further shown supply of tobacco and tobacco products to the SEZ units. The details of GST /ITC involved in the outward supplies shown to the aforesaid DTA suppliers by the Petitioner directly are as below:

Table : 1

GSTIN of the DTA Supplier

Name of the DTA Supplier

Tax involved (in Rs.)


SH Exports



J.J. Dyeing Private Limited



Kumar Sales



Premier Solutions



Shriniwas Exports




The DTA suppliers in turn, have claimed ITC of said amount and have claimed/ attempted to claim refund of such ITC against supplies made to KASEZ.

4. Mr. Harpreet Singh, learned counsel for Commissioner of Central Excise and Service Tax and CGST Delhi West, states that enquiry initiated by his client against M/s Pawanputra Exim, in which the petitioner’s premises were also searched, has been forwarded to DGGI, Ahmedabad. In fact, a categorical averment has been made in the said counter affidavit that CGST Delhi West Commissionerate is no longer conducting any investigation against the petitioner. The relevant portion of the said affidavit is reproduced hereinbelow:-

“8. That it is most respectfully submitted, since the answering respondent conducted enquiry against M/s Pawanputra Exim who received goods less invoices from the petitioner firm and DGGI, Ahmedabad was already conducting investigation against the petitioner who supplied bogus Bills not only to M/s Pawanputra Exim India but also to various other suppliers falling outside the jurisdiction of CGST Delhi West Commissionerate. Therefore, enquiry against M/s Pawanputra Exim India was forwarded to DGGI Ahmedabad to avoid duplicacy of work vide office letter F.No. DW/GST/AE/PE/Delta/Pawan/621/2019-20/21487 dated 13.08.2020. A copy of the said letter dated 13.8.2020 is annexed here as Annexure R/1.

9. That, the office of the deponent is no longer conducting any investigation against the petitioner.”

5. Today, Mrs. Anjali J. Manish, learned counsel states that she be allowed to first argue on facts in W.P.(C) 5816/2021 & W.P.(C) 4036/2021. It is pertinent to mention that Mr. Ganesh, learned senior counsel in his opening arguments in W.P.(C) 2420/2021 had argued a pure question of law, namely, whether Ahmedabad Unit of GST Intelligence can claim to be the proper officer notwithstanding the Circular dated 5th October, 2018 and claim the right to carry out investigation in respect of the petitioners even when the enforcement action had already been initiated by the State GST authorities at Gautam Budh Nagar. Mr. Ganesh, learned senior counsel clarifies that he is not appearing in W.P.(C) 4036/2021 and W.P.(C) 5816/2021. He reiterates that he in his rejoinder argument will stick to his question of law that he argued in his opening arguments.

6. Right from the day the final hearing commenced all the aforesaid matters were taken up for hearing together. This Court did not advice any counsel to argue in a particular manner or not to argue at all. It is only when the petitioner concluded their arguments that this Court called upon learned counsel for respondents to argue. Today to state that learned counsel for respondents should confine their arguments to the issue of law or the petitioner should be allowed to argue first in W.P.(C) 5816/2021 and 4036/2021 would amount to ‘derailing’ the hearing. Moreover, question of law cannot be decided in a vacuum. The facts put forward by the respondents would help the Court in determining the question of law correctly.

7. However, as today learned counsel for the petitioners in W.P.(C) 4036/2021 and W.P.(C) 5816/2021 states that she would like to argue on facts at some length, list the matter on 22nd November, 2021 for arguments on behalf of the petitioners.

8. Since, in the interim, investigation by DGGI Ahmedabad has been stayed and in effect no investigation is taking place, this Court, to balance the equities, directs that till further orders, no refunds shall be released to the petitioners.

9. The order be uploaded on the website forthwith. Copy of the order be also forwarded to the learned counsel through e-mail.

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