TaxTMI 
TaxTMI 
2025 (8) TMI 1628
X X X X Extracts X X X X
X X X X Extracts X X X X
....de GSTIN 07AHTPG4076A1ZE. The impugned SCN was issued to a total of 90 entities. The allegation against the noticees was that there was wrongful availment of Input Tax Credit (hereinafter 'ITC') by all these entities. 4. The brief facts of the case are that an investigation was initially started against M/s Padmavat Industries based in Anand Parbat Industrial Area, Central Delhi, Delhi-110005. The said investigation was initiated on the basis of information received from Directorate of Analytics and Risk Management (hereinafter, 'DGRAM'). The allegation against M/s Padmavat Industries was that it was not existing at its principal place of business. 5. One M/s DS Enterprises was, thereafter, identified as one of the recipients of goods from M/s Padmavat Industries. Further investigation at premises of M/s DS Enterprises also showed that the said firm was non-existent at the declared place of business and the enquiries made during the physical inspection further did not yield any satisfactory answers to the Respondent-Department (hereinafter 'Department'). At that stage, on 19th October, 2023 summons were issued to M/s DS Enterprises seeking various documents. 6. It is state....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ate for the filing of the annual return. The said five-year period expired on 05th February, 2025 but the impugned order has been passed only on 11th February, 2025. The ld. Counsel for the Petitioner is conscious of the fact that the date of the signed order is 31st January, 2025 but because of the date on which it is being uploaded along with the DRC-07 on the portal, the same is barred by law. Reliance is placed upon, the decision of the Division Bench of this Court in W.P.(C) 10/2022 titled as 'Suman Jeet Agarwal v. Income Tax Officer, Ward 61(1) and Others', where a similar provision under the Income Tax Act, 1961 has been interpreted by the Coordinate Bench of this Court. Ld. Counsel then relies upon one of the Allahabad High Court in HCL Infotech Ltd. v. Commissioner, Commercial Tax and Another 2024 SCC Online 5769 (Paragraph 25) to argue that if the notice lacks the basic ingredients of Section 74 of the Act, the notice would not be sustainable. (iii) The next submission is that though the impugned order is an appealable order, question of limitation being one that is jurisdictional in nature, the writ petition would be maintainable. (iv) The decision in J....
X X X X Extracts X X X X
X X X X Extracts X X X X
....other hand, Mr. Aditya Singla, ld. Sr. Standing Counsel on behalf of the Respondent - Department has submitted that - (i) On the issue of provision of consolidated SCN for multiple years, the judgment of this Court in Ambika Traders through proprietor Gaurav Gupta v. Additional Commissioner, Adjudication DGGSTI, CGST Delhi North (W.P.(C) 4853/2025 decided on 29th July, 2025) has held that, if the allegations of fraudulent availment of ITC is raised in an SCN, then the same can deal with multiple financial years. (ii) Secondly, addressing the issue of belated uploading of DRC-07, he submits that this Court in its decision in Suresh Kumar v. Commissioner CGST Delhi North, [W.P.(C) 12199/2025, decided on 13th August, 2025] has held that the belated uploading of the DRC-07 would not, in itself, make the order barred by limitation. (iii) Thirdly, reliance has also been placed on the fact that in this case, though the uploading of the impugned order happened subsequently on 11th February, 2025, an email was sent to the Petitioner on 4th February, 2025 on the registered email address of the Petitioner communicating the impugned order. 15. In response to this,....
X X X X Extracts X X X X
X X X X Extracts X X X X
....which were being sold. These are four invoices, which, according to the Petitioner, are the invoices from M/s D S Enterprises. 19. Thereafter, the impugned order was passed on 31st January, 2025. As per Table A of the impugned order the transaction value with M/s D S Enterprises and the ITC availed of by the Petitioner is mentioned along with the GST registration number. As per the invoices, the total value of the goods, insofar as the Petitioner is concerned, is to the tune of Rs. 1,44,10,717/- and the ITC involved is to the tune of Rs. 25,93,929/-. The impugned order - (i) confirms the demand of ITC along with interest, (ii) imposes a penalty equivalent to the tax liability and (iii) also imposes a penalty under Section 122 of the Act against noticee no. 2 - 90, except 34, 75 and 76 i.e., against Petitioner-Rishi Enterprises as well. 20. It is against the said order that the present petition has been preferred. One of the primary contentions of the Petitioner is that the reply has not been considered. However, a perusal of paragraph 14 of the impugned order shows that three hearings were fixed. But it is the case of the Petitioner that no notic....
X X X X Extracts X X X X
X X X X Extracts X X X X
....utilised for such periods other than those covered under sub-section (1), on the person chargeable with tax. (4) The service of such statement shall be deemed to be service of notice on such person under sub-section (1), subject to the condition that the grounds relied upon for such tax periods other than those covered under sub-section (1) are the same as are mentioned in the earlier notice. XXXX 74. Determination of tax [, pertaining to the period up to Financial Year 2023-24,] not paid or short paid or erroneously refunded or input tax credit wrongly availed or utilised by reason of fraud or any wilful-misstatement or suppression of facts.-- XXXX (3) Where a notice has been issued for any period under sub-section (1), the proper officer may serve a statement, containing the details of tax not paid or short paid or erroneously refunded or input tax credit wrongly availed or utilised for such periods other than those covered under sub-section (1), on the person chargeable with tax. (4) The service of statement under sub-section (3) shall be deemed to be service of notice under sub-section (1) of section 73, subject to the condi....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... are analysed, investigated, and enquired into, and a consistent pattern is established, that the fraudulent availment and utilization of ITC may be revealed. The language in the abovementioned provisions i.e., the word 'period' or 'periods' as against 'financial year' or 'assessment year' are therefore, significant. 48. The ITC mechanism is one of the salient features of the GST regime which was introduced to encourage genuine businesses. In the words of Shri Pranab Mukherjee, the then Hon'ble President of India, who addressed the Nation at the launch of the GST on 1st July, 2017, ITC was highlighted as one of the core features integral to the framework of the GST regime. The relevant extract of the said speech of the Hon'ble President is set out below: "I am told that a key feature of the system is that buyers will get credit for tax paid on inputs only when the seller has actually paid taxes to the government. This creates a strong incentive for buyers to deal with honest and compliant sellers who pay their dues promptly." 49. It is seen that the said feature of ITC has been misused by large number of unscrupulous dealers, businesses who have in fact u....
X X X X Extracts X X X X
X X X X Extracts X X X X
....esent case, there are a maze of transactions, which may be spreading over various financial years and, therefore, owing to the statutory language and the view already taken by this Court in the above decision, it cannot be held that a SCN or an order passed under Section 74 of the Act relating to fraudulent availment of ITC cannot relate to multiple financial years. 23. Coming to the issue of limitation, it is relevant to note that the Petitioner assails the impugned order on the ground of limitation on two sub-grounds namely: (i) The impugned order along with DRC-07 was uploaded on the portal only on 11th February, 2025 which was beyond the period of limitation. (ii) The email communication of the impugned order cannot constitute valid 'service' as the Petitioner allegedly had not received it and even otherwise email as a mode of communication would not fall into the scope of 'deemed service' under Section 169(2) of the Act. 24. A perusal of Section 74(10) of the Act would show that the order issued under Subsection 74(9) has to be issued within a period of 5 years from the due date of filing of annual returns. The said provision reads as under: "7....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ple, in the present case, the same is contained in paragraph 2 of the impugned order, which reads as under: "2) In respect of Noticee No.2 to 90 (except Noticee No. 34,75 & 76): (i) I confirm the demand and order to recover the 'Input Tax Credit' (ITC) amount(s) from Noticee No. 2 to 90 (except Noticee No. 34, 75 & 76), as mentioned against their names, Column (6) of Table-A, wrongly availed and utilized by them, is disallowed under the provisions of Section 74(1) of CGST Act, 2017 read with the DGST Act, 2017 and IGST Act, 2017, by invoking the extended period of limitation; (ii) I also confirm the demand of Interest, at applicable rates, from Noticee No. 2 to 90 (except Noticee No.34, 75 & 76) against the amount of demand, as mentioned against their respective names, in Column (6) of Table-A, under Section 50 of CGST Act, 2017 read with the DGST Act, 2017 and IGST Act, 20l7; (iii) I also impose Penalty, equivalent to tax liability, upon Noticee No. 2 to 90 (except Noticee No. 34,75 & 76) as mentioned in Column (6) of Table-A, under Section 74(1) of CGST Act, 2017 read with the DGST Act, 2017 and IGST Act, 2017; (iv) I refrain f....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ion and shall be adjudicated on merits." 30. The decision of the Telangana High Court, which has been placed before this Court, in Sahithi Marketers v. Superintendent of Central Tax, (2025) 29 Centax 129 (Telangana) also deals with a similar situation where there is delay in uploading of the DRC-07, which the Court held would not be liable to be raised as a ground for filing of writ petition. In the said decision, the ld. Division Bench of the Telangana High Court has pithily captured this very position in the following words: "3. The petitioner takes exception to the summary of the order in Form GST DRC-07, dated 03.05.2024, and the Order-in Original (O.I.O.) dated 24.04.2024 (Ex.P.2). 4. Learned counsel for the petitioner raised three fold submissions. Firstly, it is submitted that GST DRC-07, dated 03.05.2024, is barred by time. The time was extended by Notification No.56 of 2023 upto 30.04.2024 and DRC-07 is passed thereafter. The second argument is that under the Goods and Services Tax Act, 2017 (for short "the GST Act"), there is no provision to pass the O.I.O. dated 24.04.2024. Thirdly, it is argued that DRC-07 dated 03.05.2024 does not have any physical....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... or to his manager or authorised representative or an advocate or a tax practitioner holding authority to appear in the proceedings on behalf of the taxable person or to a person regularly employed by him in connection with the business, or to any adult member of family residing with the taxable person; or (b) by registered post or speed post or courier with acknowledgement due, to the person for whom it is intended or his authorised representative, if any, at his last known place of business or residence; or (c) by sending a communication to his e-mail address provided at the time of registration or as amended from time to time; or (d) by making it available on the common portal; or (e) by publication in a newspaper circulating in the locality in which the taxable person or the person to whom it is issued is last known to have resided, carried on business or personally worked for gain; or (f) if none of the modes aforesaid is practicable, by affixing it in some conspicuous place at his last known place of business or residence and if such mode is not practicable for any reason, then by affixing a copy thereof on the notice board of the ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....order would stand issued. The issuance of the order in any of the stipulated modes of service would constitute service. There is a difference between issuance of an order and deemed service under Section 169(2) of the Act. Issuance of the order is what is required under Section 74(10) of the Act and service through a mode which would constitute deemed service of the order is not mandated. Therefore, communicating an order by email would be sufficient service in terms of Section 169 of Act for constituting issuance of an order. Rule 142 is also clear in the initial portion where it uses the expression, summary of the order issued under Section 74 of the Act. 34. Coming to the last and final issue of whether there is sufficient ground to invoke the extended period of limitation under Section 74 of the Act, there cannot be any doubt that Section 74 is to be invoked in circumstances where there is an allegation of fraud, wilful misstatement or suppression. In the present case, the impugned order as well as the impugned SCN itself reveal that the investigation was commenced sometime in October 2023 when the information was received from the investigation wing. Immediately, thereafter....