Facts of the Case

The petitioner challenged a Demand Notice dated 14.06.2022 (Form GST DRC-01A) issued by the respondent demanding:

  • Tax: ₹12,56,640/-
  • Interest: ₹4,52,390/-
  • Penalty: ₹12,56,640/-
  • Total: ₹29,65,670/-

The petitioner had earlier filed a refund claim of ₹12,71,426/-, which was rejected by the adjudicating authority via order dated 12.05.2022 on the ground that the claim was based on forged Input Tax Credit (ITC).

The rejection order was passed pursuant to a Show Cause Notice dated 08.02.2021 issued under Sections 73/74 of the CGST Act read with Rule 92(3).

An appeal against the adjudication order had already been filed by the petitioner on 26.05.2022 and was pending consideration.

Despite this, the respondent issued the impugned demand notice dated 14.06.2022.

Issues Involved

  1. Whether a demand notice under GST law can be issued when the adjudication order is already under appeal.
  2. Whether issuance of demand notice during pendency of appeal is premature and legally unsustainable.
  3. Scope and applicability of Section 75 of the CGST Act in such circumstances.

Petitioner’s Arguments

  • The Show Cause Notice dated 08.02.2021 had already been adjudicated by order dated 12.05.2022.
  • The petitioner had filed an appeal against the adjudication order, which was pending.
  • Therefore, issuance of a fresh demand notice dated 14.06.2022 is premature and unsustainable.

Respondent’s Arguments

  • The demand notice was issued to protect the interests of the revenue.
  • The notice was issued under Section 73(5) of the CGST Act read with Rule 142(1A).
  • Reliance was also placed on Section 75(4) to justify the issuance of the demand notice.

Court’s Findings

  • The Court observed that the refund claim had already been rejected on the ground of forged ITC.
  • If the adjudication order is upheld, the petitioner would be liable to pay tax, interest, and penalty.
  • However, since the appeal against the adjudication order is pending, the matter is not final.
  • Therefore, the Court held that issuance of the impugned demand notice at this stage is premature.

Court Order / Decision

  • The Demand Notice dated 14.06.2022 was set aside.
  • Liberty was granted to the respondent to initiate proceedings under Section 75 of the CGST Act after the outcome of the pending appeal is determined.
  • The writ petition was disposed of accordingly.

Important Clarification

  • The Court clarified that:
    • Demand proceedings can be initiated only after finality of adjudication, especially when an appeal is pending.
    • Revenue authorities retain the right to proceed under Section 75 CGST Act, but only after the appeal is decided.
  • This judgment reinforces that parallel proceedings should not prejudice appellate remedies.


Link to download the order -  https://delhihighcourt.nic.in/app/case_number_pdf/2022:DHC:2514-DB/RAS06072022CW96292022_113301.pdf

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