Taxpayer Challenges GST Demand as Time-Barred Because DRC-01 and DRC-07 Were Issued Later; Delhi High Court Says Limitation Runs From Substantive Notice and Adjudication Order
GST Show-Cause Notices and Orders Issued Within Section 74 Limitation but Electronic Summaries Came Later; Delhi High Court Rejects Limitation Challenge and Directs Taxpayer to Statutory Appeal
Facts
M/s Aparna Collection, a proprietorship concern registered under the CGST Act, filed two writ petitions arising from proceedings under Section 74 of the Central Goods and Services Tax Act, 2017. Both matters concerned alleged availment and passing on of inadmissible Input Tax Credit through entities alleged to be non-existent or to have issued invoices without actual supply of goods.
In W.P.(C) 3449/2026, the investigation originated from an alert concerning M/s Redmancy World. The Petitioner was alleged to have availed inadmissible ITC of Rs.23,06,264, comprising CGST of Rs.11,53,132 and SGST of Rs.11,53,132.
The substantive show-cause notice in the first proceeding was dated 11 July 2024, whereas the corresponding Form GST DRC-01 was dated 23 August 2024. The proceedings culminated in an Order-in-Original dated 27 January 2025 confirming the tax demand along with applicable interest and equivalent penalty.
In W.P.(C) 3501/2026, the investigation arose from an analytical report concerning 14 allegedly non-existent firms. The Petitioner, arrayed as Noticee No.203, faced a proposed demand of Rs.2,68,320. The substantive show-cause notice was dated 9 July 2024, while Form GST DRC-01 was dated 28 August 2024.
The second proceeding culminated in an Order-in-Original dated 29 January 2025, whereas Form GST DRC-07 was dated 21 February 2025.
The Petitioner asserted that the outer date for issuance of a notice under Section 74(2) was 4 August 2024 and the outer date for issuance of an adjudication order under Section 74(10) was 4 February 2025. It therefore argued that the later dates appearing on DRC-01 and DRC-07 rendered the proceedings time-barred.
The Petitioner additionally challenged invocation of Section 74 itself, contending that the notices and orders disclosed no material establishing fraud, wilful misstatement or suppression with intent to evade tax, and no material demonstrating knowledge of or collusion with the allegedly non-existent suppliers.
Issues
Whether the date appearing on Form GST DRC-01 determines limitation for issuance of a show-cause notice under Section 74(2), notwithstanding an earlier date borne by the substantive notice under Section 74(1).
Whether an adjudication order passed within the period prescribed by Section 74(10) becomes time-barred merely because Form GST DRC-07, being the electronic summary of the order, is generated or uploaded after expiry of that period.
Whether the Petitioner could bypass the statutory appellate remedy under Section 107 by alleging absence of the foundational ingredients of fraud, wilful misstatement or suppression required for invocation of Section 74.
Whether questions concerning the Petitioner’s knowledge, collusion, admissibility of ITC, sufficiency of evidence, computation of liability and penalty were appropriate for determination in writ jurisdiction.
Petitioner’s Arguments
The Petitioner argued that Form GST DRC-01 is the electronic summary of the show-cause notice and, because the substantive notice and DRC-01 were allegedly served together, the effective date of issuance should be treated as the date appearing on DRC-01.
Since the DRC-01 forms were dated 23 August 2024 and 28 August 2024, both after the asserted statutory cut-off of 4 August 2024, the Petitioner contended that the Section 74 proceedings were barred by limitation.
In the second petition, the Petitioner argued that Form GST DRC-07 dated 21 February 2025 was beyond the asserted limitation date of 4 February 2025 under Section 74(10), thereby rendering the adjudication time-barred.
The Petitioner further submitted that Section 74 could not be invoked in the absence of material demonstrating fraud, wilful misstatement or suppression with intent to evade tax. It denied knowledge of or collusion with the allegedly fraudulent suppliers.
It argued that the alternative remedy under Section 107 did not bar the writ petitions because the challenge concerned jurisdiction and limitation and therefore raised pure questions of law.
Respondents’ Arguments
The Respondents submitted that the substantive show-cause notices dated 11 July 2024 and 9 July 2024 were issued within the limitation prescribed under Section 74(2). The later dates appearing on DRC-01 could not displace the dates of the substantive notices.
They contended that DRC-01 is merely an electronic summary consequential to the substantive show-cause notice under Rule 142 of the CGST Rules and cannot substitute the notice itself for computing limitation.
Similarly, the Orders-in-Original dated 27 January 2025 and 29 January 2025 were passed within the period prescribed by Section 74(10). The later DRC-07 dated 21 February 2025 was only a summary of the adjudication order and did not render the order time-barred.
The Respondents further argued that the Petitioner had participated in adjudication and that questions concerning fraud, suppression, knowledge, collusion, sufficiency of material and admissibility of ITC were matters for the Appellate Authority under Section 107.
They therefore contended that no exceptional circumstance existed warranting exercise of Article 226 jurisdiction.
Analysis of the Law
The Delhi High Court drew a clear statutory distinction between a substantive show-cause notice or adjudication order and their electronic summaries in Forms GST DRC-01 and DRC-07.
Section 74(2) requires issuance of the notice under Section 74(1) within the prescribed period. Rule 142 separately requires an electronic summary of that notice in Form GST DRC-01. The summary is consequential to the substantive notice and does not replace it.
Accordingly, where the substantive notices themselves were dated 11 July 2024 and 9 July 2024, both before the Petitioner’s asserted cut-off date of 4 August 2024, the later DRC-01 dates of 23 August and 28 August 2024 could not by themselves make the notices time-barred.
The same distinction applies to Section 74(10). The statutory limitation attaches to issuance of the substantive adjudication order under Section 74(9). Rule 142(5) treats DRC-07 as an electronic summary to be uploaded after issuance of the order.
Thus, the fact that DRC-07 is uploaded or bears a date after the limitation period does not, by itself, invalidate an adjudication order that was substantively issued within time.
The Court found the present matter particularly clear because the Orders-in-Original were dated 27 January 2025 and 29 January 2025, both before the asserted expiry date of 4 February 2025.
Any factual controversy concerning the precise mode or date of service would require examination of departmental records and was not sufficient to alter the fact that the substantive notices themselves bore dates within limitation.
On alternative remedy, the Court reiterated that Article 226 jurisdiction is not absolutely barred where a statutory appeal exists, but High Courts ordinarily exercise restraint when the dispute requires examination of evidence, disputed facts or correctness of findings by the adjudicating authority.
The Petitioner’s objections concerning fraud, wilful misstatement, suppression, knowledge, collusion, genuineness of suppliers, admissibility of ITC, computation of liability and penalty were all matters capable of examination by the Appellate Authority under Section 107.
Precedent Analysis
Rishi Enterprises through its Proprietor Rajeev Kumar Goel v. Additional Commissioner Central Tax Delhi North & Anr. was relied upon for the proposition that Section 74(10) requires the substantive adjudication order, not Form GST DRC-07, to be issued within the statutory period. DRC-07 is merely a summary of the order.
Suresh Kumar v. Commissioner, CGST Delhi North similarly held that a subsequent delay in uploading DRC-07 does not make an otherwise timely adjudication order barred by limitation, particularly where the substantive order has already been communicated through a permissible mode.
Sahithi Marketers v. Superintendent of Central Tax, a Telangana High Court decision, was noted as taking the same approach: DRC-07 is only a summary of the Order-in-Original, and a later date on the summary does not invalidate a substantive order passed within limitation.
Assistant Commissioner of State Tax v. Commercial Steel Limited was relied upon on the doctrine of alternative remedy. The Supreme Court recognised exceptions including breach of fundamental rights, violation of natural justice, proceedings wholly without jurisdiction and challenge to vires, but mere assertion of such grounds does not automatically require a High Court to entertain a writ petition.
Court’s Reasoning
The Court rejected the Petitioner’s central premise that the date on DRC-01 should be treated as the date of the show-cause notice. Section 74(2) refers to the substantive notice under Section 74(1), while Rule 142 describes DRC-01 only as its electronic summary.
Because the substantive notices were dated before 4 August 2024, the later DRC-01 dates did not establish a limitation defect.
The Court applied the same reasoning to DRC-07. The substantive Orders-in-Original were passed on 27 January and 29 January 2025, both before the Petitioner’s asserted deadline of 4 February 2025. DRC-07 dated 21 February 2025 could not retrospectively render the second order time-barred.
The Court observed that the limitation challenge therefore disclosed no patent jurisdictional defect capable of justifying writ intervention.
The Petitioner’s remaining objections went to the merits of the Section 74 adjudication. Determining whether the suppliers were non-existent, whether actual supply occurred, whether the Petitioner knew of any fraud, whether ITC was wrongly availed and whether penalty was sustainable would require appreciation of evidence and the adjudication record.
Undertaking that exercise in Article 226 proceedings would effectively convert writ jurisdiction into appellate jurisdiction.
The Court therefore directed the Petitioner to pursue the statutory remedy under Section 107, leaving all contentions on the merits open for consideration by the Appellate Authority.
Conclusion
The Delhi High Court disposed of both writ petitions and declined to interfere with the GST proceedings on the asserted ground of limitation.
It held that limitation under Sections 74(2) and 74(10) is determined with reference to the substantive show-cause notice and substantive adjudication order respectively, not the later dates appearing on Forms GST DRC-01 and DRC-07.
The Petitioner was granted liberty to file a statutory appeal under Section 107 and to raise all available contentions, including the applicability of Section 74, absence of fraud or suppression, lack of knowledge or collusion, admissibility of ITC, computation of liability and validity of penalty.
The Court expressly clarified that it had not expressed any opinion on those merits. If the Petitioner sought exclusion of the time spent prosecuting the writ proceedings for computing limitation for the statutory appeal, the Appellate Authority was directed to consider that request in accordance with law.
Case Details
Case: M/s Aparna Collection v. Union of India & Ors.
Court: High Court of Delhi at New Delhi
Case Numbers: W.P.(C) 3449/2026 & CM APPL. 16548/2026; W.P.(C) 3501/2026 & CM APPL. 16882/2026
Bench: Justice Anil Kshetrapal and Justice Bharat Parashar
Judgment by: Justice Anil Kshetrapal
Reserved on: 28 September 2026
Pronounced on: 5 October 2026
Statutory Provisions: Sections 74(2), 74(10) and 107, CGST Act, 2017; Rule 142, CGST Rules, 2017Result: Writ petitions disposed of; limitation challenge based on dates of DRC-01/DRC-07 rejected; liberty granted to pursue statutory appeals under Section 107.
