M/s Aparna Collection vs Union Of India & Ors.

ANIL KSHETARPAL, J.:

The present batch of two (02) Writ Petitions, both instituted by the same Petitioner, arise out of proceedings under Section 74 of the Central Goods and Services Tax Act, 2017^{11.Hereinafter referred to as ‘CGST Act’} and involve substantially identical questions concerning the effect of the dates appearing on Forms GST DRC-01 and DRC-07 upon the limitation prescribed under Sections 74(2)^{22.Hereinafter referred to as ‘Section 74(2)’} and 74(10)^{33.Hereinafter referred to as ‘Section 74(10)’} of the CGST Act. The petitions are, therefore, being disposed of by this common Judgment.

In W.P.(C) 3449/2026^{44.Hereinafter referred to as ‘First Petition’}, the Petitioner assails Form GST DRC-01 dated 23.08.2024 and the consequential proceedings arising therefrom. During the pendency of the proceedings, the adjudication culminated in the passing of Order-in-Original dated 27.01.2025.

In W.P.(C) 3501/2026^{55.Hereinafter referred to as ‘Second Petition’}, the Petitioner assails Form GST DRC-01 dated 28.08.2024 as also Form GST DRC-07 dated 21.02.2025 and the consequential Order-in-Original dated 29.01.2025.

Since the controversy in both the petitions substantially overlaps, the relevant facts of the two proceedings are noticed together, while the individual particulars of the respective proceedings are dealt with separately wherever necessary.

The Petitioner is a proprietorship concern being run in the name and style of M/s Aparna Collection and is registered under the CGST Act. The proceedings against the Petitioner arise out of an investigation concerning alleged availment and passing on of inadmissible Input Tax Credit (‘ITC’) through entities which were alleged to be non-existent or involved in issuance of invoices without actual supply of goods.

In the First Petition, the investigation originated from an alert received from the Directorate General of Goods and Services Tax Intelligence, Gurugram Zonal Unit, concerning M/s Redmancy World. The investigation thereafter extended to several firms and recipients. According to the Respondents, the proceedings concerning the Petitioner formed part of the investigation relating to recipients falling within the jurisdiction of the concerned Commissionerate.

The Petitioner was alleged to have availed inadmissible ITC of Rs.23,06,264/- comprising CGST of Rs.11,53,132/- and SGST of Rs.11,53,132/-, on the strength of invoices allegedly issued by non-existent entities without actual receipt of goods.

Significantly, the substantive Show Cause Notice^{66.Hereinafter referred to as ‘SCN’} in the first proceeding bears date 11.07.2024. The same was issued under Section 74(1) of the CGST Act. Form GST DRC-01, however, bears date 23.08.2024.

The Petitioner contends that since Form GST DRC-01 was dated 23.08.2024, the proceedings must be treated as having been initiated only on that date. According to the Petitioner, the last date for issuance of SCN under Section 74(2) was 04.08.2024, having regard to the extended due date for furnishing the annual return for Financial Year 2017-18.

The proceedings thereafter culminated in Order-in-Original dated 27.01.2025, whereby the demand of Rs.23,06,264/- was confirmed along with the applicable interest and equivalent penalty.

In the Second Petition, the investigation originated from an analytical report dated 26.05.2022 received from the Directorate General of Analytics and Risk Management and concerned 14 allegedly non-existent firms. The investigation was thereafter extended to various recipient entities.

The Respondents alleged that the said 14 entities had passed on inadmissible ITC to several beneficiary firms, including entities falling within the jurisdiction of the concerned Commissionerate. The Petitioner was arrayed as Noticee No.203.

The substantive SCN in the second proceeding bears date 09.07.2024. The SCN proposed a demand of Rs.2,68,320/- comprising CGST of Rs.1,34,160/- and SGST of Rs.1,34,160/-, besides applicable interest and penalty. The Petitioner has placed the said SCN on record and states that it came to know of the same when Form GST DRC-01 dated 28.08.2024 was served upon it.

The adjudication proceedings thereafter culminated in Order-in-Original dated 29.01.2025. Form GST DRC-07 is dated 21.02.2025.

The Petitioner contends that the date of the DRC-01, namely 28.08.2024, renders the SCN time-barred under Section 74(2) and that the date of DRC-07, namely 21.02.2025, renders the adjudication order time-barred under Section 74(10).

The Petitioner has also challenged the invocation of Section 74 on the ground that the SCNs and the Impugned Orders do not disclose any material establishing fraud, wilful misstatement or suppression of facts with intent to evade tax. It is further contended that there is no material demonstrating that the Petitioner was aware of, or in connivance with, the alleged non-existent suppliers.

Heard learned counsel representing the parties and, with their able assistance, perused the record.

Learned counsel representing the Petitioner, while submitting that the proceedings are without jurisdiction on account of limitation, has made the following submissions:

Learned counsel further submits that the invocation of Section 74 is itself without jurisdiction since there is no material demonstrating that the Petitioner had knowledge of any alleged fraudulent activities of its suppliers or had colluded with them and that the extended period under Section 74 cannot be invoked in the absence of the foundational ingredients of fraud, wilful misstatement or suppression of facts.

Learned counsel has also contended that the existence of an alternative remedy under Section 107 of the CGST Act^{77.Hereinafter referred to as ‘Section 107’} does not bar the present petitions since the challenge is to the very jurisdiction of the Respondents and raises pure questions of law concerning limitation.

Per contra, learned counsel representing the Respondents submits that the substantive SCNs were issued well within the period prescribed under Section 74(2). The date appearing on Form GST DRC-01 cannot displace the date of the substantive SCN.

It is further submitted that the Orders-in-Original were also passed within the period prescribed under Section 74(10). The subsequent date appearing on Form GST DRC-07 does not render the orders time-barred since DRC-07 is merely a summary of the adjudication order.

Learned counsel further submits that the Petitioner participated in the adjudication proceedings and had an opportunity to raise all its objections before the adjudicating authority. The challenge regarding the existence of fraud, wilful misstatement or suppression, the sufficiency of material and the alleged absence of knowledge or collusion are all matters which can be examined by the Appellate Authority under Section 107. It is, therefore, submitted that no exceptional circumstance exists warranting interference under Article 226 of the Constitution of India.

This Court has carefully considered the submissions advanced on behalf of the learned counsel representing the parties and perused the material placed on record.

The principal question which arises for consideration is whether the dates appearing on Forms GST DRC-01 and DRC-07, in the facts of the present case, render the substantive SCNs or the adjudication orders barred by limitation under Sections 74(2) and 74(10).

Section 74(2) provides that the proper officer shall issue the notice under Section 74(1) at least six (06) months prior to the time limit specified in Section 74(10) for issuance of the order. Section 74(10), in turn, prescribes the outer period within which the order under Section 74(9) is required to be issued. Both these provisions are reproduced hereinbelow for ready reference:

The distinction between the substantive SCN/Order and the electronic summaries in Forms GST DRC-01 and DRC-07 assumes significance in the present case.

In the First Petition, the substantive SCN is dated 11.07.2024. In the Second Petition, the substantive SCN is dated 09.07.2024. Both dates are prior to 04.08.2024, which is the date asserted by the Petitioner as the outer limit for issuance of notice under Section 74(2).

The mere fact that the corresponding Forms GST DRC-01 bear later dates, namely 23.08.2024 and 28.08.2024 respectively, cannot, by itself, render the substantive SCNs time-barred. The statutory requirement under Section 74(2) is with respect to issuance of the notice under Section 74(1). The electronic summary in Form GST DRC-01 is consequential to the substantive SCN and cannot be treated as substituting the substantive SCN itself.

The aforesaid position is also consistent with the scheme of Rule 142 of the Central Goods and Services Tax Rules, 2017. The Rule contemplates the service of a summary of the notice electronically in Form GST DRC-01 and, thereafter, the uploading of a summary of the order electronically in Form GST DRC-07. The said Rule is extracted hereunder:

The submission that the limitation under Section 74(2) is necessarily to be computed with reference to the date appearing on Form GST DRC-01, therefore, cannot be accepted.

The second limb of the challenge concerns Section 74(10) and, in particular, the contention that the DRC-07 dated 21.02.2025 in the Second Petition was beyond the period of limitation.

This issue is no longer res integra insofar as this Court is concerned. In Rishi Enterprises through its Proprietor Rajeev Kumar Goel v. Additional Commissioner Central Tax Delhi North & Anr., W.P.(C) 4374/2025, decided on 20.08.2025, this Court was confronted with an identical contention concerning the distinction between the date of the substantive adjudication order and the subsequent uploading of Form GST DRC-07.

In Rishi Enterprises (supra), the Court noted that Section 74(10) requires the order to be issued within the prescribed period and does not prescribe that Form GST DRC-07 itself must be issued within that period. The Court further noticed Rule 142(5), which treats DRC-07 as a summary of the order. The relevant observations of the Court in the said decision are reproduced below:

The above principle was also considered by this Court shortly prior thereto in Suresh Kumar v. Commissioner, CGST Delhi North, W.P.(C) 12199/2025, decided on 13.08.2025.

In Suresh Kumar (supra), the Court was dealing with proceedings involving a large number of noticees. The substantive order had been passed and communicated, while the corresponding Form GST DRC-07 was uploaded subsequently. The Court held that such subsequent uploading would not, by itself, render the order barred by limitation. Paragraph Nos.11 to 14 of the said decision, insofar as relevant, read as under:

The principle emerging from the aforesaid decisions is clear. The statutory limitation under Section 74(10) attaches to the substantive adjudication order contemplated under Section 74(9). Form GST DRC-07 is the electronic summary of such order. Consequently, the mere fact that DRC-07 is uploaded or bears a date subsequent to the expiry of the period prescribed under Section 74(10) would not, by itself, render the substantive adjudication order time-barred.

The present case stands on an even clearer footing. In the First Petition, the substantive Order-in-Original is dated 27.01.2025. In the Second Petition, the substantive Order-in-Original is dated 29.01.2025. Both orders precede 04.02.2025, which is the date asserted by the Petitioner as the expiry of the limitation under Section 74(10). Thus, the challenge based solely upon the dates appearing on Forms GST DRC-01 and DRC-07 cannot be sustained.

The fact that the Petitioner received the substantive SCN together with, or came to know of it through, the subsequently generated DRC-01 does not alter the date borne by the substantive SCN. In any event, the question of the precise mode and date of service, if disputed on facts, would require examination of the departmental record and the material concerning service. Such an exercise is not warranted in the present proceedings when the substantive SCNs themselves precede the alleged cut-off date.

The reliance placed by the Petitioner upon the decisions concerning the meaning of the expression ‘issue’ does not advance its case. Those decisions concern situations where the substantive notice itself was not issued within the prescribed period. The present case is materially different inasmuch as the substantive SCNs relied upon by the Petitioner itself bear dates prior to 04.08.2024.

The Petitioner has further challenged the invocation of Section 74 on the ground that the SCNs and the Orders-in-Original allegedly do not contain sufficient material to establish fraud, wilful misstatement or suppression of facts with intent to evade tax.

The Petitioner has also contended that there is no material demonstrating its knowledge of the alleged activities of the suppliers or any collusion on its part, and ITC cannot be denied to a bona fide purchasing dealer in the absence of material establishing collusion.

These submissions, however, concern the substantive merits of the adjudication. Whether the material collected by the Department is sufficient to establish the ingredients of Section 74, whether the suppliers were in fact non-existent, whether the invoices represented transactions without actual supply of goods, whether the Petitioner had knowledge of such circumstances, whether the ITC was wrongly availed or utilized, and whether the findings recorded in the Orders-in-Original are sustainable on the material placed before the adjudicating authority, are all matters which require examination of the record and appreciation of evidence.

The Orders-in-Original are appealable under Section 107. The Appellate Authority is competent to examine both questions of law and fact, including the validity of the invocation of Section 74, the material relied upon by the Department, the computation of tax and penalty and the documents and explanations relied upon by the Petitioner. It is, therefore, necessary to consider whether the aforesaid grounds justify bypassing the statutory appellate remedy.

It is well settled that the existence of an alternative remedy does not constitute an absolute bar to the exercise of jurisdiction under Article 226 of the Constitution. At the same time, where the statute provides a complete and efficacious appellate mechanism, the High Court ordinarily exercises self-imposed restraint, particularly where the challenge involves examination of disputed facts, appreciation of material or correctness of the findings returned by the adjudicating authority.

In Assistant Commissioner of State Tax and Others v. Commercial Steel Limited^{88.(2022) 16 SCC 447}, the Supreme Court has reiterated that the recognised exceptions to the rule of alternative remedy include cases involving breach of fundamental rights, violation of principles of natural justice, proceedings wholly without jurisdiction, or a challenge to the vires of legislation or delegated legislation. The mere assertion of one of these grounds, however, does not by itself require the High Court to entertain the writ petition.

In the present case, no case of denial of opportunity of hearing has been demonstrated. The Petitioner participated in the adjudication proceedings and the grievances raised in the petitions concern principally the alleged insufficiency of material, the invocation of Section 74 and the correctness of the findings returned by the adjudicating authority.

The challenge to limitation, which forms the principal basis for invoking the extraordinary jurisdiction of this Court, also does not disclose a patent jurisdictional defect. As noticed hereinabove, the substantive SCNs were issued prior to the date asserted by the Petitioner as the expiry of limitation under Section 74(2), and the substantive adjudication orders were passed prior to the date asserted as the expiry of limitation under Section 74(10).

The subsequent dates appearing on Forms GST DRC-01 and DRC-07 cannot, in view of the statutory scheme and the decisions of this Court in Suresh Kumar (supra) and Rishi Enterprises (supra), by themselves render the substantive proceedings time-barred.

The remaining grounds raised by the Petitioner essentially invite this Court to undertake an examination of the material forming the basis of the adjudication and to substitute its own assessment for that of the statutory authority. Such an exercise would, in the facts of the present case, amount to converting the writ jurisdiction into appellate jurisdiction.

The Petitioner shall, therefore, have the liberty to urge all such grounds, including the contention regarding the applicability of Section 74, the sufficiency of the allegations of fraud, wilful misstatement or suppression, the absence of alleged knowledge or collusion, the admissibility of the ITC in question, the material relied upon by the Department, the computation of liability and the validity of the penalty, before the Appellate Authority under Section 107.

Accordingly, the present Writ Petitions, along with the pending applications, are disposed of.

The Petitioner shall, however, be at liberty to avail the statutory remedy of appeal under Section 107, if so advised. All contentions available to the Petitioner in law are left open to be urged before the Appellate Authority.

It is clarified that this Court has not expressed any opinion on the merits of the aforesaid contentions in Paragraph No.51. In the event the Petitioner prefers an appeal under Section 107, the Appellate Authority shall consider the same in accordance with law and on its own merits.

In the event the Petitioner seeks exclusion of the period spent in prosecuting the present proceedings before this Court for the purposes of computation of limitation for filing the statutory appeal, the Appellate Authority shall consider such request in accordance with law, without being influenced by any observation contained in the present Judgment.