A Division Bench of the Telangana High Court has held that tax authorities cannot issue a single composite liability order against a company and its Managing Director under the GST regime and then rely on that very consolidation to foreclose independent appellate remedies for each party. Chief Justice Aparesh Kumar Singh and Justice G.M. Mohiuddin, allowing writ petitions filed by Sugna Metal Limited and its Managing Director — represented by Advocate Akruti Goyal — directed the Revenue to issue two distinct Form GST DRC-07 orders within two weeks, and ruled that the limitation clock for filing appeals would commence only upon issuance of these fresh separate orders.
The proceedings originated from a demand exceeding Rs 2.59 crore confirmed under the Central Goods and Services Tax Act, 2017, encompassing tax, interest, and penalties. The Department had issued a single Order-in-Original and a composite DRC-07 form fastening liability jointly on the company and its Managing Director. The Managing Director’s predicament was acute — he was not even registered under GST, and the absence of an individual liability order meant he had no mechanism to file an independent statutory appeal under Section 107 of the CGST Act. Senior Standing Counsel Dominic Fernandes appeared for the Revenue.
The Bench accepted the Managing Director’s contention that the composite format effectively extinguished his statutory right of appeal. It directed the authorities to first grant the Managing Director a temporary GST identification number, thereby bringing him within the procedural architecture of the statute, and thereafter to bifurcate the existing composite order into two separate DRC-07 forms — one addressed to the company, the other to the Managing Director. The Court was careful to ensure that this remedial direction did not come at the cost of limitation, clarifying that the period for filing appeals would be reckoned only from the date of issuance of the revised separate orders, thereby preserving the appellate window for both parties in full.
The decision addresses a structural vulnerability in GST adjudication practice that has received limited judicial attention. When tax authorities club the liability of a registered entity and an unregistered individual — typically a director or partner made liable under Section 137 or Section 89 of the CGST Act — into a single order, the unregistered individual is procedurally stranded: without a GSTIN, the individual cannot access the common portal to file an appeal, and without a separate order, there is nothing discrete to challenge. The Telangana High Court’s direction to issue a temporary registration number and bifurcate the DRC-07 creates a replicable template for similarly situated directors and partners across the country, and puts adjudicating authorities on notice that composite orders which structurally deny appellate access will not survive judicial scrutiny.