TaxTMI 
TaxTMI 
TaxTMI 
It is really disheartening to note that a wonderful law which is beautifully drafted by the legislature is being administered by tax officials who is unaware of what is Section 73. Recently, Bombay High Court had an excellent opportunity to analyse the language contained in 73 (2) as well as 73 (10) and arrived at the correct interpretation. The division bench at Nagpur on 17/01/2026 passed the order which is eye opener for all concerned with section 73 and I am reproducing the relevant extracts of the verdict in the court’s own language for awareness amongst all concerned.
Though the GST law is in force since 01/07/2017 in India, the abnormal delay in setting up of the GSTAT has resulted in innumerable writs across all jurisdictional high courts. In fact, the activities pertaining to setting up of GSTAT got momentum only after the intervention of Supreme Court in TEAM COMPUTERS PRIVATE LIMITED VERSUS UNION OF INDIA & ORS. - 2024 (12) TMI 875 - SC ORDER . This delay has caused huge inconveniences to the taxpayers as each and every affected case can not reach the high court by way of writ but, wherever the GST orders were challenged by way of writs, the tax professionals got enlightened on the correct interpretation of various sections, like the one on 73 in this case.
The message that this article intends to spread is that each and every adjudication order that was passed till date under section 73 has to be examined as to whether the adjudication order was passed after three months from the date of show cause notice. This exercise is a must for even financial year 2017-18 as any affected taxpayer may approach GSTAT till 30/06/2026. Even first appeal may be preferred as on date quoting this case law as the reason for condonation of the delay is the correct interpretation clarity has come only on 17/01/2026.
The High Court has categorically ruled that the language used in 73 (2) and 73 (10) are for different purposes and the requirement to issue the show cause notice at least three months prior to the last date permissible under 73 (10) for passing the order is only to help the taxpayer to enable him file a perfect reply to SCN and make submissions appropriately during hearing. Accordingly, any adjudication order passed within 89 days from date of SCN deserves an appeal as on date based on this verdict.
The relevant paras on 73 (2) and 73 (10) as well as operative portion are reproduced.
23. On the other hand, Section 73(2) of the CGST Act provides that at least three months prior to the outer limit of 3 years for passing an order under Section 73(10) of the CGST Act, a notice is to be served. 24. While the purpose behind Section 73(10) of the CGST Act is to fix the date by which an adjudication order has to be issued, the purpose of Section 73(2) of the CGST Act is to ensure that at least three months is available to the taxable person for filing a reply to the show cause notice issued to them and for being heard in a proper manner. Thus, the time period between issuance of the show cause notice and the outer limit for passing of the order should be at least three months.
25. The statutory intent behind providing this gap of 3 months can be interpreted to arise from a further reading of Section 73, CGST Act wherein, Section 73(3), CGST Act contemplates the service of a statement upon the noticee, giving all the details of the demand proposed to be raised. Further under Section 73(5), CGST Act, the noticee has the option of paying the tax by doing a self-assessment and if such amount is paid within 30 days of the issuance of the show cause notice under Section 73(1),CGST Act, no penalty would be payable by the noticee.
10. In terms of the above decision, the purpose of Section 73(2) of the CGST Act has been clearly held to provide the minimum period of three months to the assessee for filing the reply to the SCN. The three months period prescribed in Section 73(2) of the CGST Act is mandatory when read with Section 73(10) of the CGST Act.”
7. The petition is, accordingly, partly allowed. Show cause notice dated 15-5-2024 and order dated 9-7-2024 issued by respondent no. 5 are quashed and set aside.
8. The matter is remanded back to respondent no. 5 for consideration afresh in accordance with law and what has been stated in the body of the order.
It may be concluded by saying that the larger limit of three years for passing order under section 73 (10) is discretionary to the tax officials when orders are passed well within stipulated time whereas the same is mandatory on outer limit. In the like manner, any adjudication order may be passed anytime after issuing the SCN as per the convenience of the tax official so long as outer limit is met whereas it is mandatory to allow 90 days time before passing the final order.