Mandatory Three Month Gap Required between SCN and Final Order u/s 73 of GST Act: Bombay HC [Read Order]

The Bombay High Court (Nagpur Bench) held that there must be mandatory three month gap between the issuance of show cause notice (SCN) and passing of final order under section 73 of Central Goodsand Services Tax Act, 2017 (CGST Act)

The appellant, A.M. Marketplace Pvt. Ltd., filed a writ petition regarding whether the time gap of three months should be maintained between the issuance of notice under section 73 (2) and passing of final order under section 73 (10) of CGST Act.

Section 73(10) of CGST Act, provides an outer limit of three years for passing of an adjudication order whereas, section 73(2) of the act provides that SCN is to be served at least three months prior to the outer limit of three years for passing an order under section 73(10) of the CGST Act.

Anurag Soan, the petitioner counsel, contended that the gap of three months between the issuance of notice and passing the final order is important due to the following the principle of natural justice, opportunity of payment of tax and hence, the time gap should be strictly followed.

The petitioner counsel also contended that the time gap given for petitioner was only one month and twenty four days between the issuance of notice and passing of final order, which is not in accordance with the provisions of CGST Act.

Ketki Jaltare Vaidya, the counsel for the respondent, contended that the sub-section (10) of Section 73 of the CGST Act, provides the outer limit of three years to pass the final order and as per section 73 (2) of the act states that the show cause notice is issued within the 3 months prior to the three years of outer limit specified under section 73 (10) of the act.

The respondent counsel stated that a time gap of three months is not applicable for the notices issued within the time gap.

Justice Anil L Pansare and JusticeNivedita P Mehta noted that the necessity of time gap required between the issuance of notice and passing of the final order is due to multiple activities to be performed in that time period such as having an opportunity of payment of tax and following the principles of natural justice.

Accordingly, the court held that there must be a mandatory three month gap between the issuance of notice and passing the final order under sub section 2 read with sub section 10 of section 73 of the CGST Act.

In the light of facts and circumstances, the court allowed the petition partly. The SCN was quashed and the final order was set aside by the court.

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