The Delhi High Court on 14th May 2025 passed a significant ruling in favour of the assessee in Metalax Industries vs. the Additional Commissioner, clarifying that a taxpayer is entitled to file a consolidated appeal under Section 107 of the CGST Act, 2017 where a single Show Cause Notice (SCN) has been issued covering multiple financial years, even if the resultant adjudication order references only one financial year.
The dispute originated with the issuance of an SCN by the department to Metalax Industries for alleged wrongful availment of Input Tax Credit (ITC) through goods-less invoices covering the period from FY 2017-18 to FY 2019-20. The SCN followed a search conducted at the petitioner's premises. A common adjudication order in Form DRC-07 was subsequently passed by the department, creating a collective demand of INR 6.35 crores for all three financial years but mentioning only FY 2017-18 in the body of the order.
Following receipt of the DRC-07 order, the petitioner filed a consolidated appeal under Section 107 of the CGST Act, 2017 the statutory provision governing the filing of appeals against adjudication orders before the Appellate Authority.
The Additional Commissioner rejected the consolidated appeal and directed the petitioner to file separate appeals for each of the three financial years covered by the original SCN. The petitioner challenged this direction, arguing that requiring separate appeals in respect of a single common adjudication order arising from a single SCN was procedurally burdensome and legally unnecessary.
The Delhi High Court upheld the petitioner's contention. Considering the facts of the case particularly that a single SCN was issued for multiple financial years and a single common adjudication order was passed creating a collective demand, the court held that the filing of separate appeals for each financial year was not required.
The Court allowed the petitioner to file a consolidated appeal, subject to the fulfillment of the mandatory pre-deposit requirement under Section 107 of the CGST Act, 2017. This pre-deposit condition, a payment of the undisputed portion of the demand as a condition for maintaining the appeal, remains applicable and must be complied with before the consolidated appeal can be admitted.
This ruling provides meaningful procedural relief for businesses that have received department orders arising from investigations or audits spanning multiple financial years under a single SCN. Where the department attempts to compel separate appeal filings for each year, each attracting its own pre-deposit obligation and procedural burden, this judgment provides a strong judicial basis to challenge such a direction and maintain a consolidated appeal before the Appellate Authority.
Businesses currently navigating similar multi-year GST adjudication proceedings should review the structure of the SCN and adjudication order they have received and assess whether this ruling supports a consolidated challenge. Timely action is critical given the statutory time limits for filing GST appeals under Section 107. Our GST indirect tax litigation services include support in structuring and filing appeals, managing pre-deposit compliance, and representing taxpayers before Appellate Authorities. For upstream advisory on your GST compliance position before disputes escalate, our GST advisory and compliance team can assist in a proactive review.
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