The Delhi High Court ruled that an order issued beyond the mandatory five-year limitation period under Section 74(10) of the CGST Act is without jurisdiction and unenforceable. This decision was made in the case between Deepak Sharma, proprietor of M/s Days Trading Co., and the Commissioner, Department of Trade and Taxes, Government of NCT of Delhi. Deepak Sharma challenged an Order-in-Original dated December 30, 2025, which raised a demand of ₹27,13,098 for the financial year 2017-18. The department had previously issued a Show Cause Notice on September 22, 2021, under Section 74, alleging wrongful availment of Input Tax Credit and non-compliance.
The petitioner argued that according to Section 74(10) of the CGST Act, the order should have been passed within five years from the due date of filing the annual return for FY 2017-18, extended to February 5, 2020. Since the order was issued on December 30, 2025, it was over eleven months past the expiration of the limitation period on February 5, 2025.
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The Court observed that Section 74(10) mandates the proper officer to pass an adjudication order within five years from the due date for filing the annual return for the relevant financial year, leaving no room for extension. The Court noted that the impugned Order-in-Original was issued beyond the statutory deadline and the department conceded this point. Consequently, the Court held that the order was issued without jurisdiction and quashed it, emphasizing that the limitation period under Section 74(10) is mandatory and cannot be relaxed.
Order Date - 12 May 2026
Parties: Deepak Sharma (Proprietor, M/s Days Trading Co.) Vs Commissioner, Department of Trade and Taxes, Government of NCT of Delhi
Facts -
- Deepak Sharma, proprietor of M/s Days Trading Co., challenged an Order-in-Original dated 30.12.2025 and the consequential GST DRC-07, through which a demand of ₹27,13,098 was raised for FY 2017-18.
- The department had earlier issued a Show Cause Notice dated 22.09.2021 under Section 74 alleging wrongful availment of Input Tax Credit (ITC) and non-compliance, including failure to respond to discrepancies communicated through ASMT-10.
- The petitioner argued that under Section 74(10) of the CGST Act, the order was required to be passed within five years from the due date of filing the annual return for FY 2017-18, which stood extended to 05.02.2020.
- Since the impugned order was passed on 30.12.2025, more than eleven months after the limitation period expired on 05.02.2025, the petitioner contended that the order was barred by limitation.
Issue -
- Whether an Order-in-Original passed under Section 74 of the CGST Act after expiry of the five-year limitation period prescribed under Section 74(10) is legally sustainable?
Order -
- The Court observed that Section 74(10) clearly requires the proper officer to pass an adjudication order within five years from the due date for furnishing the annual return for the relevant financial year. The provision leaves no scope for extending the limitation period beyond the prescribed timeline.
- For FY 2017-18, the due date for filing the annual return had been extended to 05.02.2020. Therefore, the statutory outer limit for passing an order under Section 74 expired on 05.02.2025. Any order passed thereafter would be beyond the authority granted by law.
- The Court noted that the impugned Order-in-Original was passed on 30.12.2025, well beyond the statutory deadline. It also recorded that the department fairly admitted that the order had been issued beyond the limitation period prescribed under Section 74(10).
- The Court held that the limitation prescribed under Section 74(10) is mandatory in nature and cannot be relaxed. Since the order was passed after expiry of the limitation period, it suffered from lack of jurisdiction and was liable to be quashed.
