Consolidated SCNs for Multiple-Year Fraudulent ITC Upheld by Delhi HC

Service of Order towards consolidated SCN for multiple FYs through email is proper service

The Delhi High Court, in the case of Suresh Kumar v. Commissioner CGST Delhi, ruled that serving a signed order via email, including to a party’s chartered accountant, is valid and constitutes proper service under Section 169 of the CGST Act. The court clarified that a delay in uploading Form DRC-07 to the GST portal does not invalidate an adjudication order, particularly in cases involving multiple parties where the administrative process may require more time. The court also affirmed that consolidated Show Cause Notices (SCNs) for multiple financial years are permissible under the CGST Act, citing that sections 74(3) and 74(4) use the broader term “any period/periods,” which allows for such consolidation. This approach is considered lawful and practical for uncovering fraudulent ITC schemes that span several years and involve numerous noticees. The judgment upholds that procedural technicalities, like delayed portal uploads, should not override the substantive compliance of communicating an order through a valid statutory mode.

Facts:

Suresh Kumar (“the Petitioner”), challenged two impugned orders passed under Section 74 of the CGST Act, alleging fraudulent ITC transactions linked to non-existent suppliers. along with the corresponding DRC-07s.

Commissioner CGST Delhi North (“the Respondent”) issued two SCNs. First SCN culminated in an order dated January 16, 2025 which was uploaded on GST portal on January 27, 2025. The second SCN led to an order dated February 1, 2025, communicated via E-mail on February 4, 2025, but uploaded on the GST portal only on February 18, 2025.

The Petitioner challenged both orders, arguing that they were beyond limitation and improperly served.

Issues:

• Whether issuance of a consolidated SCN for multiple-year fraudulent ITC transactions is permissible and in consonance with the provisions of the CGST Act, 2017?
• Whether service of order through e-mail and uploading of Form DRC-07 beyond the prescribed limitation period satisfies the mandatory requirements under the CGST Act, 2017?

Held:

The Hon’ble Delhi High Court in W.P. (C) NO. 12199 of 2025 held as under:

• Held that, Sections 74(3) and 74(4) use broader terminology (“any period/periods”), distinct from “financial year” in Section 74(10). For uncovering fraudulent ITC practices spanning years, consolidated SCNs are both lawful and practical. The court reiterated the holding of the of Delhi High Court in Ambika Traders through Proprietor Gaurav Gupta v. Additional Commissioner, Adjudication DGGSTI, CGST Delhi North, 2025:DHC:6181-DB
• Noted that, Section 74(3) of the CGST Act and Section 74(4) of the CGST Act is “for any period” and “for such periods” respectively. This contemplates that a notice can be issued for a period which could be more than one financial year.
• Opined that, considering that the proceedings involve as many as 650 noticee’s, the process of generating Form DRC-07 individually, for each notice, may justifiably require a reasonable period of time. Nevertheless, once the order has been duly served upon to the noticee’s in accordance with the modes prescribed under Section 169 of the CGST Act, 2017 whether through e-mail, post, or any other recognized mode, the mere delay in uploading the order or Form DRC-07 on the portal cannot, by itself, render the order as being barred by limitation.
• Observed that, E-mail as a service has always been used as a preferred mode of service.  Therefore, service via Chartered Accountant’s e-mail address constituted valid service.

Our Comments:

The Delhi High Court’s ruling in Suresh Kumar (Supra) underscores that procedural technicalities cannot override substantive compliance. The Court reinforced the importance of validated e-mail service and upheld the procedure of consolidated SCNs in fraud cases.

Such cases require a holistic view spanning multiple periods to uncover the modus operandi of bogus transactions. The Court endorsed the permissibility of consolidated show cause notices and orders covering multiple financial years in cases of fraudulent ITC, reiterating its earlier stance in Ambika Traders(Supra).

The Court preferred the Liberal Interpretation to distinguished between the “service” and the concept of “deemed service” under Section 169(2) of the CGST Act, holding that valid service through any of the statutory modes suffices to meet the requirement of law which would eventually lower down the burden of GST Authorities in cases involving fraud as well as numerous noticees.

The judgement of the Hon’ble High Court may not go in the similar parlance with its own judgement in the case titled M/s Raj International v. Additional Commissioner CGST Delhi West & Ors., W.P. (C) 4096 of 2025 dated April 25, 2025 which emphasises the uniform practice to be followed by the GST Department in service of communications, notices, orders, etc as per the provisions of CGST Act.

Contrary views in different cases revolving around the same subject matter may result into numerous litigations on the same point.

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(Author can be reached at info@a2ztaxcorp.com)