GST: Timeline for Issuing SCN u/s 73(2) is Mandatory, says Andhra Pradesh HC [Read Order]

The Andhra Pradesh High Court ruled that the time limit specified in AP GST Act 73(2) for the issuance of a show-cause notice about a purportedly inadequate tax payment, etc., is obligatory.

In regard to the alleged underpayment of taxes, etc., for the assessment year 2020–2021, the Cotton Corporation of India, the Petitioner, contested the show cause notice dated 30.11.2024 that was sent to it under Section 73(1) r/w Rule 142 of the APGST Rules. The notice was time-barred, it argued. It was argued that because the term "shall" is used in Section 73(2) of the GST Act, it must be regarded as a necessary condition.

According to Section 73(2) of the APGST Act, the notice under subsection (1) that starts the assessment process must be sent out at least three months before the deadline for issuing the order in Section 73(10). According to Section 73(10), the assessment order must be issued no later than three years after the annual return for the specified fiscal year is due. The Government Pleader, however, argued that Section 73(2)'s requirements can only be regarded as a guideline and not a requirement that must be followed or the proceedings will be nullified.

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The petitioner also said that it would be abundantly evident from a joint reading of Section 73(2) and Rule 81-A of the CGST Rules that the deadline for issuing a show-cause notice for the assessment year 2020–2021 would be November 28, 2024. Since the show-cause notification was sent out on November 30, 2024, it is past due and non-est. According to Rule 81-A, the 28th day of February 2022 is the deadline for submitting the annual return for the fiscal year 2020–2021 under Section 44 of the GST Act.

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The division bench consisting of Justices R Raghunandan Rao and Harinath N., the GST Act has given taxpayers some rights. One of the main safeguards is that orders against taxpayers cannot be issued after the Act's specified time frames. It is established law that these statutes of limitations are obligatory and that orders cannot be issued for longer than those specified in the Act. It would be challenging to maintain that the need regarding the time frame for initiating such proceedings through the issuing of a show-cause notice would be only advisory and not required in such a scenario.

The High Court noted that if a time frame for a certain activity is expressed in terms of months, the cutoff date would be the corresponding date of that month. The Court determined that since the deadline for issuing an injunction was 28.02.2024, the three months that would pass after this date would be 28.11.2024. Given that the notice was sent on November 30, 2024, it would have passed the deadline set forth in Section 73(2) of the GST Act.

The court quashed the SCN and allowed the petition.

To Read the full text of the Order CLICK HERE

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