Facts of the Case:

In this case, a SCN dated 22.09.2021 was issued under Section 74 of the CGST Act for Financial Year 2017-18 alleging wrongful availment of Input Tax Credit and non-compliance with discrepancies earlier communicated through ASMT-10 dated 14.01.2021. The notice also alleged failure on the part of the petitioner to furnish an adequate reply to the discrepancies pointed out by the department.

The petitioner contended that under Section 74(10) of the CGST Act, an adjudication order is required to be passed within five years from the due date of furnishing the annual return for the relevant financial year. Since the due date for filing the annual return for FY 2017-18 stood extended to 05.02.2020, the last permissible date for passing the adjudication order was 05.02.2025. However, the impugned order came to be passed only on 30.12.2025, i.e., more than eleven months beyond the statutory limitation period.

Notably, the respondent department also fairly conceded before the Court that the impugned order had indeed been passed beyond the limitation prescribed under Section 74(10) of the CGST Act.

Issue:

Whether an adjudication order passed under Section 74 of the CGST Act beyond the statutory period prescribed under Section 74(10) is void and without jurisdiction. Whether the limitation period prescribed under Section 74(10) is mandatory in nature, thereby rendering the adjudicating authority functus officio upon expiry of the prescribed period.

Held That:

The High Court observed that Section 74(10) of the CGST Act clearly mandates that the proper officer must pass an order within five years from the due date for furnishing the annual return for the relevant financial year. In the present case, since the due date for furnishing the annual return for FY 2017-18 had been extended to 05.02.2020, the outer limit for passing the adjudication order expired on 05.02.2025.

The Court noted that the impugned Order-in-Original had admittedly been passed on 30.12.2025, which was far beyond the prescribed statutory period. The Court further recorded the fair concession made by the respondent department acknowledging that the order was barred by limitation.

The Court held that the limitation prescribed under Section 74(10) is mandatory in nature and cannot be relaxed. Once the statutory period expires, the adjudicating authority becomes functus officio and loses jurisdiction to pass any order under Section 74 of the CGST Act.

Accordingly, the High Court held that the impugned Order-in-Original suffered from lack of jurisdiction and was therefore liable to be quashed. The writ petition was consequently allowed and the Order-in-Original dated 30.12.2025 along with Form GST DRC-07 was set aside.

Case Name: Deepak Sharma Versus Commissioner, Department of Trade And Taxes, Govt of Nct of Delhi. dated 12.05.2026