Facts of the Case

M/s Shree Shyam Polymers challenged an Order-in-Original dated 27.01.2025 passed by the Additional Commissioner, CGST, Delhi North, along with the underlying show cause notice dated 23.07.2024 issued by the Deputy Commissioner, Anti-Evasion, CGST Delhi North. The Order-in-Original covered multiple financial years and dealt with Input Tax Credit exceeding Rs.41 crore allegedly wrongly availed/utilised, raising a demand of Rs.8,29,17,744 (equal tax and penalty). The petitioner's core challenge was to the validity of a single, consolidated show cause notice spanning several years.

Issues Involved

  1. Whether a single show cause notice or adjudication order can validly be issued for multiple financial years under Sections 73 and 74 of the CGST Act.
  2. Whether the impugned Order-in-Original, despite dealing with a consolidated period, was legally sustainable.
  3. Whether the petitioner should be relegated to its statutory appellate remedy under Section 107.

Petitioner's Arguments

  • The consolidated Order-in-Original and the preceding show cause notice, spanning multiple assessment years in one proceeding, were assailed as impermissible.

Respondent's Arguments

  • Relied on the Delhi High Court's earlier ruling in Ambika Traders, which held that Sections 73(3)/(4) and 74(3)/(4) use the language 'for any period'/'for such periods' (unlike Sections 73(10)/74(10), which use 'financial year'), showing the Legislature's intent to permit multi-period notices, particularly for fraudulent ITC chains.
  • Fraudulent ITC availment typically spans transactions across financial years and can only be established by analysing a pattern of transactions over time, making consolidated notices necessary rather than merely permissible.
  • The impugned order clearly set out the amount attributable to each year, so the consolidation did not obscure the demand and was not in violation of the statutory scheme.

Court Order / Findings

  • Following Ambika Traders, the Court held that the consolidation of a show cause notice/order for multiple years is not merely permissible but, in fraudulent-ITC cases, often required to establish the illegal modality across years.
  • Since the amounts for each year were separately and clearly decipherable in the impugned order, the consolidated format did not violate the statutory language of Sections 73/74.
  • As the impugned order was appealable under Section 107, the Court disposed of the writ petition with liberty to the petitioner to file an appeal by 30.09.2025 along with the requisite pre-deposit.
  • It directed that if the appeal is filed within the stipulated time, the Appellate Authority shall not dismiss it on the ground of limitation and shall decide it on merits.

Important Clarification

  • A single or consolidated show cause notice/adjudication order under Sections 73 or 74 of the CGST Act covering multiple financial years is legally valid — the statutory language in Sections 73(3)/(4) and 74(3)/(4) uses 'period'/'periods' rather than 'financial year', and such consolidation is particularly appropriate (even necessary) where fraudulent availment or utilisation of Input Tax Credit is alleged, since such patterns typically emerge only across multiple years.

Sections Involved

  • Section 73, CGST Act, 2017 — determination of tax not paid, other than by reason of fraud.
  • Section 74, CGST Act, 2017 — determination of tax not paid by reason of fraud, wilful misstatement or suppression.
  • Section 2(106), CGST Act, 2017 — definition of 'tax period'.
  • Section 107, CGST Act, 2017 — statutory appeal remedy and pre-deposit.

Decision – In Favour of

Disposed of with liberty to appeal; the legal question on validity of the consolidated notice was answered in favour of the Department, while the petitioner was protected from a limitation bar on its appeal — an outcome partly in favour of each side.

Case Details

High Court of Delhi at New Delhi; W.P.(C) 5202/2025 & CM APPL. 23728/2025; Coram: Justice Prathiba M. Singh & Justice Shail Jain; Date of Decision: 20.08.2025.

Link to Download the Order

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