Draft Reply To Show Cause Notice Under GST

Replying to a Show Cause Notice (SCN) under GST is critically important for the following reasons:

1. Right to Defense

• An SCN is a formal notice issued by the tax authorities to explain or justify specific actions or omissions (e.g., unpaid tax, erroneous refunds, or non-compliance).
• By replying, the taxpayer exercises their right to present their case and provide clarifications before any adverse action is taken.

2. Avoidance of Penal Consequences

• Failure to reply or inadequately addressing the SCN can lead to penalties, interest, and recovery proceedings. A detailed reply can help avoid or minimize such liabilities.

3. Opportunity to Rectify Mistakes

• If there are genuine errors in tax filings, the SCN reply allows taxpayers to correct them, make payments, or file reconciliations without severe consequences.

4. Preservation of Appeal Rights

• Providing a reply ensures that you’ve contested the allegations at the appropriate stage, which may be essential for initiating an appeal if the decision remains unfavorable.

5. Legal Obligation

• Ignoring an SCN is non-compliance and can result in adverse action, including:
  • Demand orders confirming liability.
  • Attachment of assets.
  • Prosecution in extreme cases.

6. Clarity for Authorities

• Your reply may clarify discrepancies, demonstrate compliance, or show that the issue is due to systemic or procedural errors on the authority’s part.

7. Strengthening Your Case

• A timely, well-documented response with appropriate evidence establishes your good faith and strengthens your position in case the dispute escalates to litigation.

8. Minimization of Business Disruptions

• Ignored SCNs may lead to escalated enforcement actions such as bank account freezes, property attachments, or suspension of GST registration, causing operational disruptions.

In short, replying to an SCN is necessary to safeguard your business, reduce legal and financial exposure, and maintain compliance with GST laws. An effective and well-drafted reply can resolve the matter amicably and avoid unnecessary litigation or penalties.

Format Of Draft Reply To Show Cause Notice Under GST

Here is the DRAFT FORMAT OF SCN REPLY: 

FORM GST DRC – 06

[See rule 142(4)]

Reply to show cause notice

1. GSTIN
2. Name
3. Details of Show Cause Notice
4. Date of issue
5. Financial Year
6. Reply

Given as Annexure A

7. Documents uploaded

a.  Annexure-A

b……

7. Option for personal hearing

Yes- Required

8.Verification –

I hereby solemnly affirm and declare that the information given hereinabove is true and correct to the best of my knowledge and belief and nothing has been concealed therefrom.

Signature of Authorised Signatory

ANNEXURE A:

FACTS OF THE CASE:

1. M/s. __________[hereinafter referred as “Noticee”] is located at _____________ inter alia engaged in ________________ and got registered with the GST Department vide GSTIN “___________”.
2. Noticee has been regular in discharging GST liability, when supply is made, by filing periodical returns along with the annual returns on a timely basis. Supplies effected during the disputed period were disclosed as per return 37 and 39 of the CGST Act,2017.
3.  Subsequently, Noticee is in receipt of the Show Cause Notice issued under section ___ vide Ref. No. ______________dated __________ for the financial year _________ proposing to demand CGST of Rs. _______/-, SGST of Rs. _______/- and IGST of Rs. ________/- on the following issues (relevant issues to be mentioned along with month and ).

• Turnover reported and tax discharged in GSTR-3B for the months of ___________ was Rs.__________ whereas the turnover reported and tax payable declared in GSTR-1 for the month of ___________ resulting into short payment of GST of ____________ (Overreporting of turnover in GSTR-1 but correct reporting in GSTR-3B)
• ITC availed in GSTR-3B was more than the ITC reflected in GSTR-2A resulting into excess ITC availment of Rs.__________ (due to wrong reporting of invoices in B2C table instead of B2B or GSTIN of different customer or different state of same customer etc.,)
• Disclosing ITC in wrong table (import or RCM ITC in ‘all other ITC’)
• Disclosing ITC under wrong head (IGST ITC was availed as CGST or SGST and vice versa) etc.,

4.  In response to the above notice, Noticee is herewith making the following submissions.

Submissions

1. At the outset, we emphatically deny all the allegations made hereinabove and wish to make the following submissions on merits to substantiate our claim.
2. Noticee submits that the Impugned Notice is passed without appreciating the requirement of law for imposing liability, the factual analogy in the present facts. Therefore, the findings in the Impugned Notice without considering the issue and submissions on merits is liable to be set aside.

In Re: Alleged short payment or non-payment was purely due to disclosure errors – Opportunity of rectification be given:

3. It is humbly pleaded that the Noticee be permitted the benefit of rectification of such errors as they occurred purely unintentionally and without any malafide intention. The errors committed are inadvertent and, the rectification would enable proper reporting of the turnover and input tax credit to enable claims to be made in an appropriate fashion by the petitioner and connected assessee.
4. It is further submitted that mere technical disclosure or reporting error in returns cannot be grounds to deny the legitimate benefit especially when there is no underlying taxable event took place (supply) or no revenue loss. In this regard, relied on:

a.  Star Engineers (I) Pvt. Ltd. vs. Union of India 2024 (81) G.S.T.L. 460 (Bom.) it was held that “the GST regime as contemplated under the GST Law unlike the prior regime, has evolved a scheme which is largely based on the electronic domain. The diversity, in which the traders and the assessees in our country function, with the limited expertise and resources they would have, cannot be overlooked, in the expectation the present regime would have in the traders/assessees complying with the provisions of the GST Laws. There are likely to be inadvertent and bonafide human errors, in the assessees adopting themselves to the new regime. For a system to be understood and operate perfectly, it certainly takes some time. The provisions of law are required to be alive to such considerations and it is for such purpose the substantive provisions of sub-section (3) of Section 37 and sub-section (9) of Section 39 minus the proviso, have permitted rectification of inadvertent errors.

21. We may also observe that the situation like in the present case, was also the situation in the proceedings before the different High Courts as noted by us above, wherein the errors of the assessee were inadvertent and bonafide. There was not an iota of an illegal gain being derived by the assessees. In fact, the scheme of the GST laws itself would contemplate correct data to be available in each and every return of tax, being filed by the assessees. Any incorrect particulars on the varied aspects touching the GST returns would have serious cascading effect, prejudicial not only to the assessee, but also to the third parties.

22. It is considering such object and the ground realities, the law would be required to be interpreted and applied by the Department. This necessarily would mean, that a bonafide, inadvertent error in furnishing details in a GST return needs to be recognized, and permitted to be corrected by the department, when in such cases the department is aware that there is no loss of revenue to the Government. Such freeplay in the joint requires an eminent recognition. The department needs to avoid unwarranted litigation on such issues, and make the system more assessee friendly. Such approach would also foster the interest of revenue in the collection of taxes.”

b.   Anvita Associates vs. Union of India 2024 (83) G.S.T.L. 148 (Bom.) it was held that “There appears to be an inadvertent error on the part of the petitioner in filing return in FORM-GSTR-01 and due to such defective return being filed, the Petitioner contends that it is not in a position to recover the amount from Mahindra Logistics”

c.   Mahalaxmi Infra Contract Ltd vs. GST Council 2022 (67) G.S.T.L. 140 (Jhar.) it was held that “Such correction, if does not entail technical difficulties by the GSTN, may be allowed to be made online by GSTN by opening the portal for a limited period upon due communication to the petitioner and respondent no.5 and 6 as it would reflect corresponding correction in their GSTR-2A form for the relevant period. If such a course is not possible to be done online for technical reasons, the GSTN could allow the petitioner to make such corrections through manual mode”

d.   Shiva Jyoti Construction vs. Chairperson, Central Board of Excise & Customs 2023 (71) G.S.T.L. 120 (Ori.) it was held that “The fact remains that by permitting the Petitioner to rectify the above error, there will be no loss whatsoever caused to the Opposite Parties. It is not as if that there will be any escapement of tax. This is only about the ITC benefit which in any event has to be given to the Petitioner. On the contrary, if it is not permitted, then the Petitioner will unnecessarily be prejudiced.”

e. Sun Dye Chem V. Assistant Commissioner (2021 (44) GSTL 358) it was held that “Had the requisite Forms been notified, the mismatch between the details of credit in the petitioner’s and the supplier’s returns might well have been noticed and appropriate and timely action taken. The error was noticed only later when the petitioners’ customers brought the same to the attention of the petitioner – In the absence of an enabling mechanism, the assessees should not be prejudiced from availing credit that they are otherwise legitimately entitled to. The error committed by the petitioner is an inadvertent human error and the petitioner should be in a position to rectify the same, particularly in the absence of an effective, enabling mechanism under statute.”

In Re: Disclosure errors could not be noticed due to deferment of related forms viz., GSTR-1A, GSTR-2, GSTR-3 etc., – hence, liability cannot be fastened in absence of an effective, enabling mechanism under statute:

5.   Noticee submits that the Forms, by the filing of which the Noticee might have noticed the error and sought amendment, viz. GSTR-2A and GSTR-1A are not notified during the subject period of filing returns. Had the requisite Forms been notified, the mismatch between the details of sales in the petitioner’s and the purchases in the supplier’s returns might well have been noticed and appropriate and timely action taken. The error was noticed only later at the time of annual return filing or scrutiny by the GST department. In the absence of an enabling mechanism, Noticee should not be saddled with the present GST demand when the underlying supply undisputedly remains absent in real or no real revenue accrued to the exchequer. The error committed is an inadvertent human error and the petitioner should be in a position to rectify the same, particularly in the absence of an effective, enabling mechanism under statute.

6. Noticee submits that government shall not take any advantage of its own wrong in not notifying the forms and enabling the rectification mechanism as envisaged in law. In this regard, relied on:

Commissioner of Customs (Prev.), Mumbai v. M. Ambalal, 2010 (260) E.L.T. 487 (Para 11) it was held that “Construction which permits one to take advantage of one’s own wrong or to impair one’s own objections under a Statute should be disregarded. The interpretation should as far as possible be beneficial in the sense that it should suppress the mischief and advance the remedy without doing violence to the language”

Union of India v. Shakti LPG Ltd., 2008 (223) E.L.T. 129 (S.C.) (Para 9).

In Re: Mere procedural lapse/defect cannot create substantial liabilities or deny the substantial benefit:

7.    Noticee submits at best it would be a procedural lapse which can be condoned when the substantial conditions are fulfilled and to ensure that the intended objective is not defeated. It is settled law that procedures are handmaids of justice and mere procedure lapse shall not deny the substantial benefit when all substantial conditions are fulfilled and intended objective is being met. Procedure has been prescribed to facilitate verification of substantive requirements. The core aspect or fundamental requirement in the present case is _____________. If this requirement is met other procedural deviations can be condoned. The interpretation unduly restricts the scope of a provision to be avoided so that it may not take away with on hand what the policy gives with the other. Relied on five judge bench decision of Hon’ble Supreme court in case of Commissioner of C. Ex., New Delhi vs. Hari Chand Shri Gopal 2010 (260) E.L.T. 3 (S.C.) wherein it was held that

“24. The doctrine of substantial compliance is a judicial invention, equitable in nature, designed to avoid hardship in cases where a party does all that can reasonably expected of it, but failed or faulted in some minor or inconsequent aspects which cannot be described as the “essence” or the “substance” of the requirements. Like the concept of “reasonableness”, the acceptance or otherwise of a plea of “substantial compliance” depends upon the facts and circumstances of each case and the purpose and object to be achieved and the context of the prerequisites which are essential to achieve the object and purpose of the rule or the regulation. Such a defence cannot be pleaded if a clear statutory prerequisite which effectuates the object and the purpose of the statute has not been met. Certainly, it means that the Court should determine whether the statute has been followed sufficiently so as to carry out the intent for which the statute was enacted and not a mirror image type of strict compliance. Substantial compliance means “actual compliance in respect to the substance essential to every reasonable objective of the statute” and the court should determine whether the statute has been followed sufficiently so as to carry out the intent of the statute and accomplish the reasonable objectives for which it was passed. Fiscal statute generally seeks to preserve the need to comply strictly with regulatory requirements that are important, especially when a party seeks the benefits of an exemption clause that are important. Substantial compliance of an enactment is insisted, where mandatory and directory requirements are lumped together, for in such a case, if mandatory requirements are complied with, it will be proper to say that the enactment has been substantially complied with notwithstanding the non- compliance of directory requirements. In cases where substantial compliance has been found, there has been actual compliance with the statute, albeit procedurally faulty. The doctrine of substantial compliance seeks to preserve the need to comply strictly with the conditions or requirements that are important to invoke a tax or duty exemption and to forgive non-compliance for either unimportant and tangential requirements or requirements that are so confusingly or incorrectly written that an earnest effort at compliance should be accepted. The test for determining the applicability of the substantial compliance doctrine has been the subject of a myriad of cases and quite often, the critical question to be examined is whether the requirements relate to the “substance” or “essence” of the statute, if so, strict adherence to those requirements is a precondition to give effect to that doctrine. On the other hand, if the requirements are procedural or directory in that they are not of the “essence” of the thing to be done but are given with a view to the orderly conduct of business, they may be fulfilled by substantial, if not strict compliance. In other words, a mere attempted compliance may not be sufficient, but actual compliance of those factors which are considered as essential.

8.    Noticee submits mere technical defects in disclosures cannot be ground to create the substantial liabilities or deny the legitimate benefit. In this regard, Noticee relies on: 

• a. Bombardier Transportation India Pvt. Ltd. vs. Directorate General of Foreign Trade 2021 (377) E.L.T. 489 (Guj.)
• b. Commissioner of Customs vs. M.D. Overseas (2023) 10 Centax 394 (Del.).
• Disclosing ITC under wrong head (IGST ITC was availed as CGST or SGST and vice versa):

9.    Noticee submits that the Noticee has wrongly availed ITC of CGST and SGST instead of IGST and Vice versa and proposing to demand the differential ITC along with the interest and penalty.

10. The Noticee further submits that the Noticee has committed a mistake inadvertently and filed the GST return. In addition, mere differences in the GST heads cannot be considered as the basis to conclude that ITC is excess claimed and also on an overall basis there is no revenue loss and is revenue neutral to the Government and Noticee.

11. The Noticee has relied upon the following case laws:

a. Cosyn Ltd. vs. Assistant Commissioner of State Tax, Bowbazar (2024) 18 Centax 556 (Cal.)/2024 (87) G.S.T.L. 388 (Cal.) it was held that “Where assessee availed IGST credit and subsequently used same for payment of CGST and SGST, and thus, tax corresponding to state GST had flown to respective State of West Bengal, assessment order passed against assessee was to be set aside.”

b. M/s. Star Engineers (I) Pvt. Ltd. v. Union of India & Ors. 2024 (2) TMI 853 -HC-GST, wherein the court observed that in cases where there was a bonafide error in filing of the return and when there was no loss of revenue caused to the Government/exchequer, the technicalities on any legitimate rectification ought not to come in the way of the assessee, so as to suffer an inadvertent error, which would have a cascading.

c. M/S. Y.B. Constructions Pvt. Ltd., Versus Union of India And Others – 2023 (3) TMI 111, allowing the Petitioner to rectify the mistake in its GST Returns will not cause any loss to the Respondent, as there will be no escapement of tax, however, denying the request will prejudice the Petitioner, who is entitled to receive the ITC benefit.

12. The Noticee submits that such payment of tax by the supplier in CGST and SGST instead of IGST does not lead to any short payment of tax. In this regard, the Noticee submits that the excess paid tax in one head can be adjusted with the tax payable in the other head i.e., tax under SGST and CGST as IGST; and vice versa as the tax is duly remitted to the Government and there is no revenue loss to the Government. In support of the said argument, the Noticee places reliance on the decision of Kerala High Court in the case of Saji S., Proprietor, Adithya and Ambadi Traders, Ranjith R., Proprietor, Ranjith Roadlines Versus The Commissioner, State Gst, The Assistant State Tax Officer [2018 (11) TMI 954], wherein it was held that, “10. Under these circumstances, I find no difficulty for the respondent officials to allow the petitioner’s request and get the amount transferred from the head ‘SGST’ to ‘IGST’. It may, as the Government Pleader has contended, take some time, but it is inequitable for the authorities to let the petitioner suffer on that count.

• So I hold that the 2nd respondent will release the goods forthwith along with the vehicle and, then, ensure that the tax and penalty already stood remitted under the ‘SGST’ is transferred to the head ‘IGST’. The writ petition is disposed of accordingly.”
• In Re: Demand cannot sustain when there is a revenue neutrality situation:
• 13. Revenue Neutrality is an accepted principle in the field of taxation. The rectification of the errors would enable proper reporting of the turnover and input tax credit to enable claims to be made in an appropriate manner and connected taxpayer. The entire exercise would invariably leads to a “Revenue Neutrality situation”.
• 14. In this regard, Noticee relies on the following decisions setting aside the duty demands if the procedure would be revenue neutral:
• · Commissioner v. Narayan Polyplasts — 2005 (179) E.L.T. 20 (S.C.)
• · Commissioner v. Narmada Chematur Pharmaceuticals Ltd. — 2005 (179) E.L.T. 276 (S.C.)
• · Punjab Tractors Ltd. vs. Commissioner of C. Ex., Chandigarh 2005 (181) E.L.T. 380 (S.C.)
• · Commissioner of Cus. & C. Ex. vs. Textile Corpn. Marathwada Ltd. 2008 (231) E.L.T. 195 (S.C.)
• · Magma Fincorp Ltd. vs. State of Telangana 2019 (26) G.S.T.L. 7 (Telangana)

15. Noticee submits that GST being a new law, the imposition of heavy penalties during the initial years of implementation is not warranted. Further, the government has been extending the due dates & waiving the late fees for delayed filing etc., to encourage compliance.

16. Further, noticee submits that issue involves interpretation thereby, the suppression or willful misstatement cannot be stated. It is fact that the department has carved out a new entry for rate of tax and issue and issuance of circular proves that there is sufficiency confusion among the trade. Hence, suppression or willful misstatement cannot be adopted.

17. Noticee submits that the GST is still under trial-and-error phase and the assessees are facing genuine difficulties and the same was also held by various courts by deciding in favour of the assessee. Therefore, the imposition of the penalty during the initial trial and error phase is not warranted and this is a valid reason for setting aside the penalties. In this regard, reliance is placed on

a. Bhargava Motors Vs UOI 2019 (26) GSTL 164 (Del) wherein it was held that “The GST system is still in a ‘trial and error phase’ as far as its implementation is concerned. Ever since the date the GSTN became operational, this Court has been approached by dealers facing genuine difficulties in filing returns, claiming input tax credit through the GST portal. The Court’s attention has been drawn to a decision of the Madurai Bench of the Madras High Court dated 10th September, 2018 in W.P. (MD) No. 18532/2018 (Tara Exports v. Union of India) [2019 (20) G.S.T.L. 321 (Mad.)] where after acknowledging the procedural difficulties in claiming input tax credit in the TRAN-1 form that Court directed the respondents “either to open the portal, so as to enable the petitioner to file the TRAN-1 electronically for claiming the transitional credit or accept the manually filed TRAN-1” and to allow the input credit claimed “after processing the same, if it is otherwise eligible in law

b.  The Tyre Plaza Vs UOI 2019 (30) GSTL 22 (Del)

c. Kusum Enterprises Pvt Ltd Vs UOI 2019-TIOL-1509-HC-Del-GST

In Re: Impugned notice is not valid.

Notice issued on assumptions and presumptions.

18. Noticee submits that impugned notice was issued with prejudged and premeditated conclusions on various issues raised in the notice. That being the case, issuance of notice in that fashion is bad in law and requires to be dropped. In this regard, reliance is placed on Oryx Fisheries Pvt. Ltd. v. Union of India — 2011 (266) E.L.T. 422 (S.C.).

19. Noticee submits that the subject notice is issued based on mere assumption and unwarranted inference, interpretation of the law without considering the intention of the law, documents on record, the scope of activities undertaken, and the nature of activity involved, the incorrect basis of computation, creating its own assumptions, presumptions. Further, they have arrived at the conclusion without actual examination of facts, and provisions of the CGST Act, 2017. In this regard, Noticee relies on the decision of the Hon’ble Supreme Court in case Oudh Sugar Mills Limited v. UOI, 1978 (2) ELT 172 (SC).

Notice is vague and lack of details.

20. Noticee submits that the impugned notice has not given clear reasons as to how the amounts received by the Noticee are liable for GST at 18%. The impugned notice has simply mentioned that the Notification No.06/2021-Central Tax (rate) dated 30.09.2021 was amendment in nature and thereby retrospectively applicable.

21. Further, the impugned notice has not mentioned the reasons for such allegations made by the noticee in reply to Form DRC-01A.

22. Therefore, the same is lack of details and hence, becomes invalid. In this regard, reliance is placed on

a.  CCE v. Brindavan Beverages (2007) 213 ELT 487(SC) the Hon’ble Supreme Court held that “The show cause notice is the foundation on which the department has to build up its case. If the allegations in the show cause notice are not specific and are on the contrary vague, lack details and/or unintelligible that is sufficient to hold that the noticee was not given proper opportunity to meet the allegations indicated in the show cause notice.”

b.  Dayamay Enterprise Vs State of Tripura and 3 OR’s. 2021 (4) TMI 1203 – Tripura High Court

c.  Mahavir Traders Vs Union of India (2020 (10) TMI 257 – Gujarat High Court)

d.  Teneron Limited Versus Sale Tax Officer Class II/Avato Goods and Service Tax & Anr. (2020 (1) TMI 1165 – Delhi High Court)

e.  Nissan Motor India Private Limited, Vs the State of Andhra Pradesh, The Assistant Commissioner (CT) (2021 (6) TMI 592 – Andhra Pradesh High Court)

From the above, it is clear that the notice issued is without details and thereby it is invalid and the same needs to be dropped.

Notice is not uploaded online.

23. Noticee submits that the impugned notice has been served manually. However, Noticee has not received any summary of the proposed demand in Form DRC-01 electronically to date which is mandated as per Rule 142(1) of CGST Rules, 2017 when a demand notice is issued under Section 74 of CGST Act, 2017.

24. In this regard, Noticee wishes to rely on the Judgement of Hon’ble Madhya Pradesh High Court in the case of Mr. Akash Garg vs. The State of MP [2020-TIOL-2013-HC-MP-GST] wherein the Hon’ble High Court has held that

“6.1 A bare perusal of the aforesaid provision reveals that the only mode prescribed for communicating the show-cause notice/order is by way of uploading the same on website of the revenue.

7. The State in its reply has provided no material to show that show-cause notice/orders No.11 and 11a dated 10.06.2020 were uploaded on website of revenue. In fact, learned AAG, Shri Mody, fairly concedes that the show-cause notice/orders were communicated to petitioner by E-mail and were not uploaded on website of the revenue.

8. It is trite principle of law that when a particular procedure is prescribed to perform a particular act then all other procedures/modes except the one prescribed are excluded. This principle becomes all the more stringent when statutorily prescribed as is the case herein.

9. In view of above discussion, this Court has no manner of doubt that statutory procedure prescribed for communicating show-cause notice/order under Rule 142(1) of CGST Act having not been followed by the revenue, the impugned demand dated 18.09.2020 vide Annexure P/1 and P/2 pertaining to financial year 2018-2019 and 2019-2020 and tax period September, 2018 to March, 2019 and April, 2019 to May, 2019 respectively, deserves to be and is struck down.”

25. Noticee further submits that CBIC vide Instruction No. 4/2023-GST [F.NO.20016/41/2023-CBIC], dated 23-11-2023 has clarified that uploading the SCN and its summary online is mandatory as per the GST provisions. The relevant extracts of the instructions are reproduced below:

“4. It is highlighted that non-issuance of the summary of such notices/ orders electronically on the portal is in clear violation of the explicit provisions of CGST Rules. Besides, serving/ uploading the summary of notices/ orders electronically on the portal not only makes the said notices/ orders available electronically to the taxpayers on the portal, but also helps in keeping a track of such proceedings and consequential action in respect of recovery, appeal etc, subsequent to issuance of such notices/ orders. Accordingly, any deviation from this requirement under CGST Rules may adversely impact record keeping under GST. Further, such an action may also impact further proceedings of appeal and/ or recovery to be done seamlessly on the portal.”

In absence of adherence to the statutory mandate, the impugned proceedings are void ab initio and requires to be dropped on this count alone.

Separate SCN to be issued for CGST & SGST

26. Without prejudice to the above, Noticee submits that the impugned notice has proposed to demand both CGST and SGST under the corresponding enactments which are separately enacted. In this regard, Noticee submits that Section 6(2) of the CGST Act, 2017 specifies that a separate notice and orders are required to be passed for both CGST and SGST. That being the case, a separate notice is required to be issued raising the demands under that corresponding law. For instance, the demand raised under SGST law requires separate notice and CGST demand requires separate notice whereas in the present case, the two demands are raised in a single notice and no bifurcation for the same has been provided. Hence, the impugned notice is issued in violation of Section 6(2) of the CGST Act, 2017 and is not sustainable.

Impugned Notice is Time Barred u/s 73 of CGST Act,2017.

27. Further, it is informed that above-mentioned Show Cause Notice is issued beyond the time limit as per Section 73 of CGST Act,2017. It is submitted that the impugned SCN was issued under section 73 of CGST Act, 2017 which provides for adjudication of demand within 3 years from the due date of the annual return of the corresponding FY. For FY 2018-19, the annual return due date falls on 31.12.2020 and the 3-year time limit expires by 31.12.2023 however citing the difficulties caused due to Covid-19, the Government has extended the time limit from 31.12.2023 to 31.03.2024 by exercising the powers u/s. 168A, ibid by the Notification No. 09/2023 dated 31.03.2023 and further extended to 30.04.2024 vide Notification No. 56/2023-CT dated 28.12.2023 and corresponding Notification ________ dated ________ issued by State government.

28. In this regard, it is submitted that an extension of the time period prescribed for issuance of show cause notice under Section 73 (10) of the Goods and Service Tax Act, 2017 is not sustainable in law, in as much as COVID restrictions were uplifted long back in the year 2022 and the revenue had sufficient time to complete the scrutiny and audit process. Further, the ‘force majeure’ is as defined u/s. 168A, ibid was never occurred from 2022 till the expiry of the extended due date of 31.03.2024. Hence, the extension of time runs beyond the mandate of Section 168A and is not sustained in the law.

29. It is settled law that any delegated legislation travelling beyond the Statutory provisions be ‘ultra vires’ and do not sustain in law.

30. Noticee further submits that the GST Council while recommending or Government while issuing impugned notifications has not taken the basis or data for not completing the due date except claiming that representations were received. It failed to provide how many returns are selected for scrutiny or audits etc., and pending completion while seeking extension. In the absence of reasonable materials to show the effect of force majeure on completion of actions, the extension is arbitrary. This is crucial due to fact that GST department across India issued several notices well within the original due date which cannot happen if the reasons stated for extensions are true. In the present case also, the SCN was already issued in the year 2022.

31. In any case, once the power is exercised with Covid-19 reason, it cannot be ground for further extensions in absence of any continuation of Covid-19 effect after first extension in 2022. The Hon’ble SC vide suo moto order dated 10.01.2022 in Suo Motu Writ Petition [C] no. 3 of 2020 had extended the period of limitation only up to 28.02.2022. Thus, there was no occasion for the GST Council to take resort to the factor of the COVID-19 pandemic to extend the time limit under Section 73(10) of the CGST Act, 2017.

32. Noticee further submits that mere difficulties are insufficient to invoke the ‘force majeure’ as there was difference between difficulties and impossibility to complete certain actions.

33. Noticee submits that Section 168A of CGST Act, 2017 requires to be interpreted strictly as general power to modify the timelines is already available to Government u/s. 172 of CGST Act, 2017 which was exercised for certain occasions.

34. Noticee craves leave to alter, add to, and or amend the aforesaid grounds.

35. Noticee wishes to be heard in person before passing any order in this regard.

For M/s. _______________________________________

Authorised Signatory

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