Facts of the Case

Nitin Gupta, proprietor of Shree International, challenged six separate orders-in-original passed under Section 74 of the CGST Act, 2017 by the CGST, Delhi North Commissionerate, relating to financial years 2017-18 to 2020-21. The highest-value order, dated 28.01.2025, raised a demand of Rs.7,95,42,282/- as tax (with penalty totalling Rs.15,90,84,564/-) covering ten allegedly overlapping suppliers; the remaining five orders raised smaller, overlapping demands qua several of the same suppliers. No appeals had been filed and the appeal period under Section 107 had expired. The petitioner argued the orders should be treated as one composite proceeding since they concerned common suppliers and overlapping tax periods, also invoking a CBIC circular dated 6th July, 2022 on the limited scope for invoking Section 74 in ITC-availment cases.

Issues Involved

  1. Whether multiple Section 74 orders passed by different proper officers, involving common suppliers, must be treated as one adjudication and challenged in a single appeal.
  2. Whether the pre-deposit requirement under Section 107 must be satisfied separately for each of the six orders.
  3. Whether the CBIC circular dated 6.7.2022 restricting invocation of Section 74 applies on the facts, given the number and diversity of noticees across orders (ranging from 27 to 1,155).

Petitioner's Arguments

  • The six orders raised overlapping demands qua the same suppliers, and a common adjudication order ought to have been passed instead of six separate orders by different proper officers.
  • Per the CBIC circular dated 6.7.2022, no demand under Section 74 could have been raised against the petitioner absent proof of no actual supply; at most a penalty under Section 122 could apply.

Respondent's Arguments

  • The CBIC circular dated 6.7.2022 merely reiterates existing law and lays down no fresh mandate binding on the Department.
  • Given the large and differing number of noticees in each order (27 to 1,155), the proper officer for each proceeding could not be determined solely by reference to the petitioner.

Court Order / Findings

  • The Court held that the impugned orders involve numerous other noticees/suppliers with distinct ITC-availment issues, and a common order clubbing them into a single proceeding was not warranted; the differing proper-officer jurisdiction and factual maze made writ adjudication of these contentions unsuitable.
  • The petitioner was permitted to file six individual appeals under Section 107, but the mandatory pre-deposit was required only in respect of the lead order dated 28.01.2025 (tax of Rs.7,95,42,282/-), with credit given for Rs.35,00,000/- already deposited under protest; no pre-deposit was directed for the remaining five orders.
  • Appeals were to be filed by 30th September, 2025 and, if so filed, were to be adjudicated on merits without rejection on the ground of limitation. All rights and contentions, including on the circular's applicability, were left open for the appellate forum.

Important Clarification

  • Where several Section 74 orders are passed by different proper officers against overlapping suppliers but involve distinct sets of noticees and ITC chains, a writ court will not compel their consolidation into one appeal; each order must ordinarily be appealed separately, though relief on the pre-deposit quantum can be tailored to avoid multiplicity of financial burden.
  • Arguments on the scope of Section 74 vis-à-vis a CBIC circular on genuine versus non-genuine supply are matters for the appellate authority, not for writ adjudication, where the facts are contested and voluminous.

Sections Involved

  • Section 74, CGST Act, 2017 — demand where tax is evaded by fraud, wilful misstatement or suppression of facts.
  • Section 107, CGST Act, 2017 — appeal to the appellate authority, including the pre-deposit requirement.
  • Section 122, CGST Act, 2017 — penalty for certain offences (as an alternative to Section 74 as per the CBIC circular relied upon).

Decision – In Favour of

Disposed of with directions, partly in favour of the Assessee — the petitioner was granted the procedural relief of filing separate appeals with pre-deposit limited to one order, but no finding was rendered on the substantive Section 74/circular dispute, which was left to the appellate authority.

Case Details

Court: High Court of Delhi at New Delhi
Case No.: W.P.(C) 11051/2025 & CM APPL. 45479/2025
Coram: Hon'ble Justice Prathiba M. Singh and Hon'ble Justice Shail Jain
Date of Order: 20th August, 2025

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