M/S Aparna Collection vs. Union Of INDIA & Ors.

Facts

The Petitioner, M/s Aparna Collection, filed two writ petitions challenging proceedings initiated under Section 74 of the CGST Act. In the first petition, the Petitioner challenged Form GST DRC-01 dated 23.08.2024 and the consequential Order-in-Original dated 27.01.2025, concerning an alleged inadmissible Input Tax Credit (ITC) of Rs. 23,06,264/-. The substantive Show Cause Notice (SCN) in this case was dated 11.07.2024. In the second petition, the Petitioner challenged Form GST DRC-01 dated 28.08.2024, Form GST DRC-07 dated 21.02.2025, and the Order-in-Original dated 29.01.2025, involving a proposed demand of Rs. 2,68,320/-. The substantive SCN in this case was dated 09.07.2024. The Petitioner alleged that the proceedings were time-barred based on the dates on the DRC forms.

Held

The Court held that the writ petitions were not maintainable and should be dismissed, directing the Petitioner to avail the statutory remedy of appeal. The Court reasoned that the challenge to limitation, based on the dates of Forms GST DRC-01 and DRC-07, did not disclose a patent jurisdictional defect. It noted that the substantive Show Cause Notices (SCNs) were issued prior to the Petitioner's asserted expiry of limitation under Section 74(2), and the adjudication orders were passed prior to the asserted expiry of limitation under Section 74(10). The Court relied on previous decisions, including Suresh Kumar (supra) and Rishi Enterprises (supra), stating that the subsequent dates on Forms GST DRC-01 and DRC-07, by themselves, cannot render the substantive proceedings time-barred. The Court further observed that the remaining grounds raised by the Petitioner invited an examination of the material forming the basis of adjudication, which would amount to converting writ jurisdiction into appellate jurisdiction. The Court emphasized that the Appellate Authority under Section 107 is competent to examine all questions of law and fact, including the validity of Section 74 invocation, sufficiency of allegations, admissibility of ITC, and computation of liability. The Petitioner was granted liberty to urge all grounds before the Appellate Authority and to seek exclusion of the period spent in prosecuting the writ petitions for filing the appeal.

Key Issues

1. Whether the proceedings initiated under Section 74 of the CGST Act are time-barred, considering the dates on Forms GST DRC-01 and DRC-07, and the relevant limitation periods prescribed under Sections 74(2) and 74(10) of the CGST Act? Petitioner's arguments: The Petitioner contended that the effective date of initiation of proceedings should be taken as the date appearing on Form GST DRC-01, which was subsequent to the statutory limitation period of 04.08.2024 for issuing the SCN under Section 74(2). Furthermore, the Petitioner argued that the date on Form GST DRC-07 (21.02.2025) rendered the adjudication order time-barred under Section 74(10), which had a limitation date of 04.02.2025. The Petitioner also argued that Section 74 was wrongly invoked as there was no material demonstrating fraud, wilful misstatement, suppression of facts, or Petitioner's knowledge of such intent. Revenue's arguments: The judgment does not explicitly record arguments made by the Revenue on the specific issue of limitation concerning the dates on DRC forms. However, the Court's reasoning implies that the Revenue likely contended that the substantive SCN dates were within limitation.