Case Summary
Case Title: Sulender Shah & Anr. v. Additional Commissioner/Joint Commissioner CGST Delhi & Anr.
Court: High Court of Delhi
Petition No.: W.P.(C) 6481/2025, CM APPLs. 29538/2025 & 29539/2025
Category of Dispute: Validity of Show Cause Notice & compliance with GST procedural forms (DRC-01 & DRC-02)
Date of Judgement: 15th May 2025
Relevant Sections/Rules: Article 226 of the Constitution, Section 74 of CGST Act (demand proceedings), Rule 142 of CGST Rules (DRC-01, DRC-02)
Facts (Paras 3–9)
The petitioners, a Chartered Accountant (Sulender Shah) and a trader (Atul Aggarwal), challenged a Show Cause Notice (SCN) dated 2 August 2023 and sought stay of adjudication proceedings. Earlier, in W.P.(C) 15766/2023, the Court had directed issuance of DRC-01 and DRC-02 electronically. These were issued on 26 September 2023 and served on 7 December 2023. Petitioners contended that the forms were defective, as they did not quantify tax/penalty separately. They also claimed prejudice since ICAI had initiated disciplinary proceedings against the CA petitioner. The SCN alleged their involvement with fake firms floated by Shubham Gupta and Vikas Gupta, with whom they admittedly had dealings. Both petitioners were arrested during investigation.
Questions before the Court (Paras 6, 10)
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Whether the DRC-01 and DRC-02 issued to the petitioners were invalid for non-compliance with Rule 142 of the CGST Rules?
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Whether the writ petition could be entertained at the stage of SCN when serious fraud allegations were under adjudication?
Observations (Paras 10–12)
The Court noted that DRC-02 specifically referred to the SCN containing computation details. When multiple persons are involved in fraudulent transactions, it is sufficient that the SCN indicates the amounts relatable to each noticee. The adequacy of computation is a matter of adjudication, not writ jurisdiction. The Court reiterated that veracity of petitioners’ recorded statements or correctness of allegations cannot be tested in writ proceedings under Article 226.
Judgement (Paras 13–14)
The Court dismissed the writ petition, holding that adjudication must proceed in accordance with law. It clarified that all objections regarding computation or defects in DRC forms may be raised during adjudication proceedings, but not at the writ stage.
Table of Earlier Cases Referred
| Case | Citation | Verdict/Ratio |
|---|---|---|
| Sulender Shah & Anr. v. Addl. Commissioner/Joint Commissioner CGST & Anr. (first round) | W.P.(C) 15766/2023, Delhi HC (7 Dec 2023) | Directed issuance of DRC-01 and DRC-02 electronically within one week. |
Between Fine Lines
For businesses and professionals, this ruling underscores that GST procedural challenges—such as defects in DRC-01/DRC-02—must be contested during adjudication, not directly in writ jurisdiction. Courts will not intervene at SCN stage, especially in fraud-related cases, unless clear jurisdictional errors are shown.
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