Tax Authority Must Validate Extended Limitation Period Before Issuing Show Cause Notice, Ensuring Procedural Fairness for Petitioner

HC allowed the petition by directing the tax authority to first adjudicate the validity of invoking extended limitation period before proceeding with the show cause notice. Petitioner was instructed to file a reply within two weeks and appear before the authority on specified date, ensuring procedural fairness in tax proceedings.

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In the Kerala High Court judgment, the petitioner challenged the issuance of a show cause notice under Section 74 of the Central Goods and Services Tax/State Goods and Services Tax Act, 2017 (CGST/SGST Act), arguing that it lacked any material or assertion justifying the invocation of the extended period of limitation. The petitioner contended that this issue could be adjudicated under Article 226 of the Constitution of India, as it pertains to a jurisdictional fact.The respondents, represented by the Senior Government Pleader and Standing Counsel, argued that the determination of whether there was material to invoke the extended period of limitation is a factual question that should be addressed by the competent authority, not directly by the High Court.Justice Gopinath P. concluded that the writ petition should be disposed of by directing the 2nd respondent to first adjudicate whether there was a valid reason for invoking the extended period of limitation before proceeding with the show cause notice. The petitioner was instructed to file a reply to the show cause notice, specifically objecting to the invocation of the extended period, within two weeks. The petitioner is also required to appear before the 2nd respondent on October 4, 2024, for further adjudication.

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