The Andhra Pradesh High Court has held that 2 days delay in issuing GST notice cannot be condoned.
The bench of Justice R Raghunandan Rao and Justice Harinath N. has observed that the show cause Notice issued on 30th November 2024 for FY 2020-21 under section 73 is time barred and liable to be set aside.
The bench noted that Section 75 of the GST Act, stipulates that the taxpayer is not only entitled to a notice before any assessment is carried out but also the right of personal hearing, irrespective of whether such personal hearing is requested. When there is a possibility of an adverse order being passed against the taxpayer, the facility of obtaining at least three adjournments for personal hearing etc.
The petitioner/assessee has received a show cause notice in relation to the assessment year 2020- 2021, calling upon the petitioner to show cause why an assessment should not be carried out in relation to short payment of tax etc. Notice was issued under Section 73(1) r/w Rule 142 of the APGST Rules.
Section 73(10) of the APGST Act, stipulates that the assessment order, in relation to any assessment year, would have to be issued within three years from the due date for furnishing of annual return for the said financial year. Section 73(2) of the APGST Act stipulates that the notice under sub- section(1) which initiates the assessment proceedings, would have to be issued at least three months prior to the time limit specified in sub-section(10) for issuance of the order.
Rule 81-A of the CGST Rules, which would be applicable to the proceedings under APGST Act, stipulates that the due date for filing the annual return, under Section 44 of the GST Act, for the financial year 2020- 2021 would be the 28th day of February, 2022.
The petitioner submitted that the last date for issuance of a show cause notice, for the assessment year 2020-2021 would be the 28th day of November, 2024. As the show cause notice has been issued on 30.11.2024, the same is beyond time and is non est.
The department contended that a “month” would mean “a calendar month”. As the 28th of February is the end of the month of February, the last date of issuance of a notice would have 1st of December, 2024 or at the worst 30th of November, 2024. As the notice has been issued on 30.11.2024, it would be within limitation. Further, the provisions of Section 73(2) can at best be treated as a directory requirement and not a mandatory requirement whose violation would render the proceedings non est.
The petitioner contended that the provisions of Section 73(2) of the GST Act, are mandatory. He makes this submission on the ground that the word used in Section 73(2) is “shall” and the same would have to be treated as a mandatory requirement. The legislature, in its wisdom, had determined that there should be a minimum period available to the taxpayer to set out its case in the case of any show cause notice being issued in an assessment proceeding.
The court while allowing the petition has held that the time permit set out under 73(2) of the GST Act is mandatory and any violation of that time period cannot be condoned, and would render the show cause notice otiose.
Case Details
Case Title: M/s. The Cotton Corporation of India Versus Assistant Commissioner (ST) (Audit) (FAC)
Case No.: W.P.No.1463 of 2025
Date: 05/02/2025
Counsel For Petitioner: Karthik Ramana Puttamreddy
Counsel For Respondent: GP
