Order passed one day late beyond its limitation period is void by limitation under the GST Law

The Hon’ble Telangana High Court in the case of M/s. Lakshmi Bhanu Steel Traders Versus Assistant Commissioner (ST), Madhapur-2 Circle, Hyderabad and Others - 2025 (7) TMI 1186 - TELANGANA HIGH COURT held that an order passed beyond the statutory period of limitation is unsustainable and liable to be set aside.

Facts:

Lakshmi Bhanu Steel Traders (“the Petitioner”) filed a writ petition under Article 226 of the Constitution of India challenging the order dated May 01, 2024, the summary order in Form GST DRC-07 dated May 01, 2024, and related proceedings for the tax period 2018-19 under Section 73 of the CGST Act. The Petitioner contended that the impugned order was passed after the limitation period, which expired on April 30, 2024. It was also alleged that the proceedings were vitiated for want of physical or digital signatures, for issuing the summary show cause notice in Form GST DRC-01 on April 20, 2024 without granting at least three months’ time under section 73(2) of the CGST/SGST Act, and for not issuing Form GST DRC-01A as required under rule 142(1A). The Petitioner further sought setting aside of garnishee proceedings initiated through Form GST DRC-13 dated March 15, 2025, citing hardship.

The Respondents defended the action but during the hearing agreed that the impugned order dated May 01, 2024 was beyond the prescribed limitation period.

The Petitioner, relying on the decision in WP No. 10895 of 2025 dated June 12, 2025, sought quashing of the order and consequential reliefs.

Issue:

Whether an order passed beyond the statutory period of limitation under the CGST/ SGST Act is sustainable in law?

Held:

The Hon’ble Telangana High Court in M/s. Lakshmi Bhanu Steel Traders Versus Assistant Commissioner (ST), Madhapur-2 Circle, Hyderabad and Others - 2025 (7) TMI 1186 - TELANGANA HIGH COURT held as under:

• Noted that, the impugned final order was passed on May 1, 2024, whereas under the applicable limitation provisions of section 73(10) of the CGST/ SGST Act, the last permissible date for passing the order for the tax period 2018–19 was April 30, 2024.
• Noted that, this meant the order was issued one day after the statutory deadline, rendering it time-barred. 
• Directed that, the final order dated May 1, 2024 be set aside and that any consequential bank attachment, if existing, stands revoked. Allowed the writ petition accordingly.

Our Comments:

In the case of Rinkumoni Bordoloi Versus Union Of India, The Central Board Of Indirect Taxes And Customs, The Goods And Services Tax Council, The Principal Commissioner State Tax Kamrup, The Assistant Commissioner State Tax Sibsagar. Guwahati - 2024 (9) TMI 1350 - GAUHATI HIGH COURTthe Gauhati High Court quashed an order passed under Section 73(9) of the CGST/SGST Act on the ground that it was issued after the expiry of the three-year limitation period prescribed under Section 73(10). The Court held that the order was without jurisdiction and therefore liable to be set aside. This squarely supports the position that any order under Section 73(9) passed even a single day after the limitation date is void, unless a valid extension notification is in force.

Relevant Provisions:

Rule 142(1A), the CGST Rules, 2017

“Rule 142. Notice and order for demand of amounts payable under the Act. –

(1A) The proper officer may, before service of Notice to the person chargeable with tax, interest and penalty, under sub-section (1) of Section 73 or sub-section (1) of Section 74 or sub-section (1) of section 74, as the case may be, communicate the details of any tax, interest and penalty as ascertained by the said officer, in Part A of FORM GST DRC-01A;

(2) Where, before the service of Notice or statement, the person chargeable with tax makes payment of the tax and interest in accordance with the provisions of sub-section (5) of section 73 or clause (i) of sub-section (8) of section 74A, as the case may be, or tax, interest and penalty in accordance with the provisions of subsection (5) of section 74 or clause (i) of sub-section (9) of section 74A, or where any person makes payment of tax, interest, penalty or any other amount due in accordance with the provisions of the Act whether on his own ascertainment or, as communicated by the proper officer under sub-rule (1A), he shall inform the proper officer of such payment in FORM  GST DRC-03 and an acknowledgement, in FORM GST DRC–04 shall be  made  available  to the  person through the  common portal electronically.”

Section 73(10) of the CGST Act, 2017

“Section 73. Determination of tax, pertaining to the period up to Financial Year 2023-24, not paid or short paid or erroneously refunded or input tax credit wrongly availed or utilised for any reason other than fraud or any willful-misstatement or suppression of facts.-

(10) The proper officer shall issue the order under sub-section (9) within three years from the due date for furnishing of annual return for the financial year to which the tax not paid or short paid or input tax credit wrongly availed or utilised relates to or within three years from the date of erroneous refund.”

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