Facts of the Case

The Petitioner, M/s Raghunath Enterprises, challenged the Order‑in‑Original No. 83/ADC/D.N./Shaukat Ali Nurvi/2024‑25 dated 27 January 2025 passed by the Respondent, Additional Commissioner, CGST, Delhi North, and the Show Cause Notice No. 77/2024‑25 dated 23 July 2024 issued by the Deputy Commissioner, Anti‑Evasion, CGST‑Delhi North. The impugned Show Cause Notice and consequent order related to wrongful availment or utilization of Input Tax Credit (“ITC”) allegedly amounting to more than ₹89 crore across multiple tax periods, resulting in a demand of ₹54,35,244 (₹27,17,622 as tax and ₹27,17,622 as penalty). The core contention was whether a consolidated Show Cause Notice covering multiple financial years was permissible under the CGST Act, 2017. 

Issues Involved

  1. Whether a single consolidated Show Cause Notice can be issued for multiple years under Sections 73 and 74 of the CGST Act, 2017;
  2. Whether the impugned proceedings and order are appealable; and
  3. Whether the Petitioner could file an appeal without being time barred due to limitation. 

Petitioner’s Arguments

The Petitioner contended that:

  • A consolidated Show Cause Notice for multiple financial years was impermissible.
  • The impugned Order‑in‑Original was flawed as it violated statutory mandates by aggregating separate years into one proceeding.

The Petitioner invoked the principles of natural justice and statutory interpretation in arguing that separate tax periods require separate notices, rather than one notice covering disparate years. 

Respondent’s Arguments

The Respondent countered that:

  • A consolidated Show Cause Notice covering multiple years was valid because Sections 73(3), 73(4), 74(3), and 74(4) of the CGST Act contemplate notices encompassing “any period” or “such period” beyond a specific financial year.
  • The factual matrix of fraudulent availment or utilisation of ITC justified examining inter‑year transaction patterns in a single consolidated notice.
  • The impugned order was appealable under Section 107 of the CGST Act. 

Court’s Order / Findings

The Delhi High Court upheld the legal permissibility of issuing a consolidated Show Cause Notice covering multiple tax periods, especially in cases involving alleged fraudulent availment or utilisation of ITC under Sections 73 and 74 of the CGST Act, 2017. The Court observed that the language of Sections 73(3), 73(4), 74(3), and 74(4) does not confine notices to singular financial years, and that factual analysis in inter‑year transactions often necessitates consolidation.

Relying on precedent (the judgment in Ambika Traders), the Court clarified that such consolidation is both statutory and practical in fraud‑linked ITC cases. The Petition was disposed of with liberty to the Petitioner to file an appeal by 30 September 2025 with requisite pre‑deposits. The appellate authority was directed not to dismiss the appeal on limitation grounds and to decide it on merits. 

Important Clarification

The High Court emphasised that in fraud‑based ITC cases:

  • The statutory provisions contemplate notices and statements “for any period” rather than a fixed “financial year”; and
  • Consolidated Show Cause Notices across multiple years do not violate legal principles where they assist in tracing a continuous pattern of wrongful availment/utilisation of ITC.

Sections Involved

Sections 73 & 74 of the CGST Act, 2017 — relating to determination of tax not paid or erroneously refunded or input tax credit wrongly availed or utilised, including provisions for fraudulent cases.

Link to download the order -  https://delhihighcourt.nic.in/app/showFileJudgment/PMS20082025CW53522025_124127.pdf

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