Case Law Details
Deepak Sharma Vs Commissioner (Delhi High Court)
GST Demand Quashed Because Order Passed Beyond Five-Year Limitation Under Section 74(10); GST Order Set Aside Because Limitation Period Expired on FY 2017–18 Assessment; GST Demand Quashed Because Section 74(10) Time Bar Was Breached by Nearly One Year; GST Order Cancelled Because Authority Became Functus Officio After Limitation Expired
The Delhi High Court considered a writ petition challenging an Order-in-Original dated 30.12.2025 passed under Section 74 of the Central Goods and Services Tax Act, 2017, which confirmed a tax demand of Rs. 27,13,098 for Financial Year 2017–2018. The petitioner, a registered GST assessee, was engaged in business under a proprietorship concern. The proceedings originated from a Show Cause Notice dated 22.09.2021 alleging wrongful availment of Input Tax Credit and non-compliance, including failure to respond to discrepancies communicated through ASMT-10 dated 14.01.2021.
The primary ground of challenge was that the impugned order was barred by limitation under Section 74(10) of the CGST Act. It was argued that the provision mandates that an order must be passed within five years from the due date of filing the annual return for the relevant financial year. For Financial Year 2017–2018, the due date for filing the annual return had been extended to 05.02.2020. Accordingly, the last permissible date for passing the order was 05.02.2025.
Since the impugned order was passed on 30.12.2025, it was contended that it was issued beyond the statutory limitation period by more than eleven months. The petitioner argued that the limitation under Section 74(10) is mandatory, and once the prescribed period expires, the authority loses jurisdiction to pass any order.
The respondent’s counsel also acknowledged that the order was passed beyond the prescribed statutory period of five years under Section 74(10) of the CGST Act.
Upon examining the record, the Court confirmed that the due date for filing the annual return for FY 2017–2018 was extended to 05.02.2020. Therefore, the limitation period for passing the order expired on 05.02.2025. Since the impugned order was passed on 30.12.2025, it was clearly beyond the statutory limit. The Court further noted that the limitation prescribed under Section 74(10) is mandatory in nature and cannot be relaxed, and that the authority becomes functus officio after expiry of the limitation period.
In view of the admitted factual position and statutory interpretation, the Court held that the impugned order suffered from lack of jurisdiction. Accordingly, the Order-in-Original dated 30.12.2025 along with the consequential GST DRC-07 was quashed and set aside. The writ petition was allowed, and all pending applications were disposed of.
FULL TEXT OF THE JUDGMENT/ORDER OF DELHI HIGH COURT
1. The present writ petition under Article 226 of the Constitution of India assails the Order-in-Original dated 30.12.2025 passed under Section 74 of the Central Goods and Services Tax Act, 2017 (hereinafter the CGST Act) bearing Reference No. ZD0712250855671 along with Form GST DRC-07 for the Financial Year 2017–2018, whereby a total demand of Rs. 27,13,098/- has been confirmed against the Petitioner.
2. The Petitioner is a registered person under the GST regime holding Registration No. 07AWBPS3597D1ZB in respect of his proprietorship concern, M/s Days Trading Co.
3. A Show Cause Notice dated 22.09.2021 bearing Reference No. ZD070921017165K was issued under Section 74 of the CGST Act for Financial Year 2017–2018, proposing a demand on account of alleged wrongful availment of Input Tax Credit and non-compliance, including failure to respond to discrepancies communicated vide ASMT-10 dated 14.01.2021, and to furnish a reply thereto.
4. Thereafter, the impugned Order-in-Original dated 30.12.2025 came to be passed confirming the aforesaid demand for the Financial Year 2017–2018.
5. Learned counsel for the Petitioner submits that the impugned order is liable to be set aside as the same has been passed beyond the statutory period prescribed under the CGST Act. It is submitted that Section 74(10) mandates that an order must be passed within a period of five years from the due date for the filing of the annual return of the relevant financial year. In the present case, for Financial Year 2017–2018, the due date for filing the annual return stood extended to 05.02.2020, and therefore the last date for passing the order would be 05.02.2025.
6. It is further submitted that the impugned order has been passed on 30.12.2025, i.e., after a delay of more than eleven months beyond the prescribed statutory period, rendering the same barred by limitation. It is submitted that the limitation prescribed under Section 74(10) is mandatory in nature and once the period lapses, the authority becomes functus officio and lacks jurisdiction to pass any order.
7. Mr. Batra, learned counsel appearing for the Respondent, submits that the impugned Order-in-Original, having been passed on 30.12.2025, i.e., after a delay of more than eleven months beyond the prescribed statutory period, is beyond the limitation contemplated under Section 74(10) of the CGST Act.
8. Perused the record.
9. A perusal of Section 74(10) of the CGST Act makes it clear that the proper officer is required to pass an order within a period of five years from the due date of furnishing of the annual return for the relevant financial year. In the present case, it is not in dispute that the due date for filing the annual return for Financial Year 2017–2018 was extended to 05.02.2020. Consequently, the outer limit for passing the order expired on 05.02.2025. The impugned Order-in-Original having been passed on 30.12.2025 is clearly beyond the statutory period prescribed. It is also now a matter of record that the Respondent has fairly admitted that the impugned order is beyond the statutory period of five years as stipulated under Section 74(10) of the CGST Act. The impugned order thus suffers from lack of jurisdiction. The mandate of limitation under Section 74(10) is mandatory and cannot be relaxed.
10. In view of the above, the present petition is allowed. The impugned Order-in-Original dated 30.12.2025 bearing Reference No. ZD0712250855671 along with Form GST DRC-07 is quashed and set aside.
11. The petition along with pending applications, if any, stands disposed of.
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