Invalidation of Time-Barred GST Demands: Delhi High Court Quashes Order Issued Beyond Section 74(10) Limitation

The administration of indirect taxes in India is governed by strict procedural timelines designed to provide certainty to the assessee and ensure timely revenue collection for the exchequer. When adjudicating authorities fail to adhere to these statutory deadlines, their actions are rendered legally void. This fundamental principle of administrative law was recently reaffirmed by the Hon’ble Delhi High Court in the landmark judicial pronouncement of Deepak Sharma Vs Commissioner.

The Court decisively quashed a Goods and Services Tax (GST) demand order because it was passed after the expiry of the maximum permissible time limit stipulated under Section 74(10) of the Central Goods and Services Tax Act, 2017. By ruling that the adjudicating authority becomes functus officio once the limitation period lapses, the High Court has provided a massive relief to the assessee and reinforced the sanctity of statutory deadlines.

This comprehensive article delves into the factual matrix of the dispute, the legal arguments presented, the statutory framework governing limitation periods under the GST regime, and the broader implications of this ruling for an assessee facing similar time-barred adjudications.

The Factual Matrix of the Dispute

The legal controversy originated from a tax assessment pertaining to the Financial Year 2017–2018. The petitioner, an individual registered under the GST framework, operated a proprietorship business under the trade name M/s Days Trading Co.

Initial Scrutiny and Show Cause Notice

The procedural sequence commenced when the GST department flagged certain discrepancies in the returns filed by the assessee.

  1. Issuance of ASMT-10: On 14.01.2021, the revenue authorities issued a notice in Form ASMT-10, communicating observed discrepancies primarily related to the alleged wrongful availment of Input Tax Credit (ITC).
  2. Alleged Non-Compliance: The department contended that the assessee failed to provide a satisfactory response or rectify the discrepancies highlighted in the ASMT-10 notice.
  3. **Issuance of Show Cause Notice (SCN)😗* Consequently, the proper officer escalated the matter by issuing a formal Show Cause Notice on 22.09.2021 under Section 74 of the Central Goods and Services Tax Act, 2017. This SCN proposed a substantial tax recovery based on the allegations of irregular ITC claims.

The Impugned Adjudication Order

Despite the SCN being issued in September 2021, the adjudication process dragged on for years. Ultimately, the proper officer passed the Order-in-Original on 30.12.2025. This order confirmed a total tax demand of Rs. 27,13,098 against the assessee and was accompanied by the issuance of a recovery notice in Form GST DRC-07.