Facts of the Case

M/s Kanha Polymers (Petitioner) challenged the Order‑in‑Original No. 83/ADC/D.N./Shaukat Ali Nurvi/2024‑25 dated 27 January 2025 and the Show Cause Notice No. 77/2024‑25 dated 23 July 2024 issued by the Additional Commissioner and Deputy Commissioner, CGST, Delhi North.

The impugned communication alleged wrongful availment and utilization of Input Tax Credit (ITC) amounting to over ₹41 crore, resulting in a demand of ₹1,08,80,826 (including equal penalty) across multiple financial years.

Issue(s) Involved

Whether a single consolidated GST Show Cause Notice and adjudication order can be lawfully issued for multiple years under Sections 73 and 74 of the CGST Act, 2017?

Sub‑issues:

  • Whether consolidated notices are permissible where alleged ITC fraud spans several financial years.
  • Interpretation of “tax period” vs. “financial year” under CGST Act provisions. 

Petitioner’s Arguments

The Petitioner contended that:

  • A single Show Cause Notice covering multiple financial years was impermissible.
  • The impugned order should be quashed as it was not confined to a specific financial year.
  • The consolidated notice and order violated statutory limits as per Sections 73/74 of the CGST Act. 

Respondent’s Arguments

The Revenue defended the consolidated SCN and adjudication order by asserting that:

  • Sections 73 and 74 allow notices for “any period” or “such periods”, not limited strictly to single financial years.
  • Multiple year notices are justified due to the nature of fraudulent ITC availment spanning inter‑year transactions, and tracing fraud requires consolidated examination. 

Court Order / Findings

The Delhi High Court upheld the consolidated SCN and order:

  • Legality of Consolidated Notice: The Court extensively examined Sections 73(3), 73(4) and 74(3), 74(4) of the CGST Act and held that the language “for any period” permits notices spanning more than one financial year.
  • Distinction between “Tax Period” and “Financial Year”: The Court noted the statutory wording contrasts the terms “tax period” and “financial year” in different sub‑sections, underscoring legislative intent to allow consolidated notices where fraud spans multiple years.
  • Purpose of Consolidation in Fraud Cases: The Court emphasized that fraudulent availment/utilization of ITC often requires a connected transaction analysis across periods; consolidated notices are legally permissible and practically necessary.
  • Appealability & Directions: The court disposed of the petition, observing the impugned order is Appealable under Section 107 of the CGST Act. The Petitioner was granted liberty to file an appeal by 30 September 2025 with applicable pre‑deposit and directed that limitation shall not be a ground for dismissal. 

Important Clarifications

  • Sections 73 & 74 of the CGST Act: Notices can be issued “for any period” where ITC has been wrongfully availed/used.
  • Statutory Interpretation: Use of terms “period” or “periods” rather than restricting to single “financial year” reflects legislative intent for consolidated actions where necessary.
  • Consolidated Notices in Fraud: Where fraudulent ITC transactions extend across years, consolidated notices are permissible and often required for effective adjudication.

Link to download the order - https://delhihighcourt.nic.in/app/showFileJudgment/PMS20082025CW54792025_124412.pdf

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