Delhi Sales Corporation Vs Principal Commissioner of Central Tax & Ors. (Delhi High Court)
The Delhi High Court heard the matter through hybrid mode in a writ petition filed under Article 226 challenging the Order-in-Original dated 21 January 2025 and the corresponding DRC-07 dated 23 February 2025, under which a demand of ₹1,32,467 was raised against the petitioner. The petitioner argued that the entire tax demand had already been paid in August 2022, well before issuance of the show-cause notice dated 7 June 2024. This payment was reflected in a letter dated 31 August 2022 and was also acknowledged by the department in the impugned order, where the petitioner, listed as noticee number 631, had an appropriated amount of ₹2,07,868 recorded against it. During the hearing, counsel for the department confirmed that the petitioner had deposited the tax amount. The department’s stand was that the impugned order involved numerous buyers and recipients connected to 79 fake non-existent firms, and a penalty was imposed accordingly.
The petitioner relied on Section 74(8) of the Central Goods and Services Tax Act, 2017, and submitted that the amount had been paid long before the issuance of the SCN, as evidenced by the fact that the summary SCN in Form GST DRC-01 was issued only on 27 September 2024. The petitioner further argued that Section 74(5) permits payment of tax before issuance of an SCN and provides that once the tax, interest, and 15% penalty are paid prior to the SCN, no further proceedings can be undertaken. The petitioner asserted that no penalty could be imposed once the statutory pre-SCN payment mechanism had been complied with.
