• Dated 07^th March, 2025

High Court of Andhra Pradesh held that any SCN u/s 73(2) of CGST Act 2017 issued beyond "28th of November 2024" for the assessment year 2020-21 shall be invalid

Background of the case:The petitioner challenged a show cause notice issued on 30th November 2024 concerning tax assessment for the financial year 2020-21. Under Section 73(2) of the CGST Act, any show cause notice for tax demands not involving fraud, must be issued at least three months before the final deadline for assessment. Since the deadline for assessment was 28th February 2025, the notice should have been issued by 28th November 2024. However, as the notice was sent two days late, the petitioner argued that it was legally invalid.

Issue:The case revolves around the time limit for issuing a show cause notice (SCN) under Section 73(2) of the CGST Act, 2017. The petitioner, Cotton Corporation of India, challenged a show cause notice issued beyond the prescribed statutory period.

Respondant's contention:The Assistant Commissioner (ST) (Audit) (FAC) argued that the term "month" should be understood as a "calendar month" implying that the notice was issued within a reasonable timeframe. However, the petitioner contended that Section 73(2) of the said Act used the term "shall" making the time limit mandatory rather than discretionary. The court relying on past Supreme Court rulings including "Himachal Pradesh vs. Himachal Techno Engineers", reaffirmed that statutory time limits must be strictly adhered to. Consequently, the court held that the notice having been issued beyond the prescribed period, was invalid.

Judgement held in favour of Petitioner:The court held that legal protections for taxpayers such as the right to a fair notice period and personal hearings under Section 75 of the GST Act would be undermined if authorities were allowed to disregard time limits. As a result, the High Court of Andhra Pradesh ruled in favour of the petitioner quashing the show cause notice and reinforcing that the statutory time limit under Section 73(2) of the CGST Act is mandatory and cannot be extended.

Conclusion:

The judgment reaffirmed that statutory time limits under the CGST Act must be strictly followed. Authorities cannot extend the timeline arbitrarily ensuring taxpayers' rights are protected.

Author: Harsh Kr Gupta

Edited By: