FACTS OF THE CASE:

The Petitioners, Devi Industrial Engineers & Ors., challenged the impugned order dated 28.01.2024 passed by the Additional Commissioner of Central Goods and Services Tax (CGST), Delhi South Commissionerate under Article 226 of the Constitution. The GST Department had issued a Show Cause Notice on 24.07.2024 proposing denial of Input Tax Credit (ITC) on the ground that invoices were received without receipt of goods. The Petitioner appeared and replied to the notice. The impugned order confirmed the demand of GST on the ground of alleged irregular ITC passed on by M/s Haryana Excell Forging amounting to approximately Rs. 41.64 crores, of which the Petitioner’s share was Rs. 76,710/‑. The Department issued three separate DRC‑07 notices spanning three financial years (2017‑18, 2018‑19, 2019‑20) despite there being only one transaction between the Petitioner and the supplier. 

ISSUES INVOLVED:

  1. Whether multiple DRC‑07 notices for separate financial years, relating to a single transaction, could be sustained in law.
  2. Whether issuance of duplicate demands amounted to double recovery / illegal duplication.
  3. Whether the impugned order was sustainable in view of the facts and principles of tax law. 

PETITIONER’S ARGUMENTS:

• The Petitioner contended that only one transaction took place in the FY 2018‑19 and all other DRC‑07 notices for FY 2017‑18 and FY 2019‑20 were duplicates.
• The demand confirmed through duplicate notices lacked legality because the invoice transaction took place only once.
• Petitioner deposited the tax amount and prayed for quashing of the two extra DRC‑07 notices.
• Quashing relief was sought in respect of both additional DRC‑07 orders, being ultra vires and arbitrary.

RESPONDENT’S ARGUMENTS:

• The Respondent (GST Department) argued that the demands were raised in accordance with departmental findings.
• It was submitted that separate demands were legitimately raised for the respective years.
• The Department denied that duplication had occurred; thus challenging the Petitioner’s request for quashing. 

COURT FINDINGS / JUDGMENT:

The Delhi High Court (Coram: Justice Prathiba M. Singh & Justice Shail Jain) held that the issuance of duplicate DRC‑07 notices for FY 2017‑18 and FY 2019‑20 was unsustainable, because:

  • The transactions between the Petitioner and M/s Haryana Excell Forging were limited only to FY 2018‑19.
  • Identical demands formulated through multiple notices amounted to double taxation on the same invoice.

Thus, the Court quashed two DRC‑07 notices:

  • Reference No. ZD070225002084Z (FY 2017‑18) and
  • Reference No. ZD070225002088R (FY 2019‑20),
    both dated 01.02.2025.

However, the notice for FY 2018‑19 (Reference No. ZD070225002086V, dated 01.02.2025) was upheld. The Court clarified that the order was passed on unique facts of the case and shall not apply to other noticees in the impugned order. Petitioner and his directors were given liberty to avail appropriate remedies against the upheld DRC‑07 in law. 

IMPORTANT CLARIFICATIONS / LEGAL PRINCIPLES:

• A single taxable event cannot be fragmented into multiple demands across different years without rational basis.
• Issuance of duplicate notices in GST proceedings may be treated as double recovery, restrained in law.
• Upholding one valid demand while quashing others reflects the principle of proportionality in tax proceedings.

SECTIONS / PROVISIONS INVOLVED:

• Article 226, Constitution of India – Writ jurisdiction to challenge orders lacking legality.
• Provisions under the Central Goods and Services Tax Act (CGST Act) relating to issuance of DRC‑07 demand notices (Input Tax Credit reversal and demand confirmation).

Link to download the order -  https://delhihighcourt.nic.in/app/showFileJudgment/PMS10112025CW158742025_110939.pdf

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