Show cause notice limitation under the extended five year rule for ST 3 return remanded for adjudicator to decide first.

The central issue is whether a show cause notice for the April-July 2016 period was issued after the extended five-year limitation from the ST-3 return due date. The tribunal found the limitation plea was specifically raised and determinative, but the adjudicator failed to rule on it and proceeded to merits. The tribunal therefore remanded the matter for the adjudicating authority to decide-first-whether the notice is time barred under the extended five year rule; if found time barred the demand will fall, and if not the substantive merits remain open. The appeal was allowed only to the extent of this remand.

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Issues: Whether the show cause notice issued on 23.11.2021, relating to the period April 2016 to July 2016, is barred by limitation because it was issued beyond the extended five-year period from the due date of filing the ST-3 return.

Analysis: The appellant raised a specific preliminary plea that the show cause notice was issued after expiry of the extended five-year limitation period calculated from the ST-3 return due date for the half year April 2016 to September 2016. The Adjudicating Authority's order did not record any finding on this limitation plea but proceeded to consider substantive defences on the merits. The tribunal examined whether the limitation point, having been specifically pleaded and being determinative of the demand, was addressed by the adjudicator; finding it was not, the tribunal considered it appropriate for the adjudicator to decide that preliminary issue in the first instance. The tribunal remanded the matter specifically for a finding on whether the issuance of the show cause notice was time-barred under the extended five-year limitation rule, noting that if the adjudicator finds the notice barred by limitation, the demand would not survive, whereas an adverse finding on limitation would leave open the merits for challenge.

Conclusion: The appeal is allowed to the extent that the matter is remanded to the Adjudicating Authority to decide the preliminary issue of whether the show cause notice was issued beyond the extended five-year period; no other relief is granted by the tribunal.

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