2025 (8) TMI 68 - HC - GST

Show Cause Notice Under Section 73 CGST Held Valid; Petition Dismissed, Appeal Allowed with Pre-Deposit by August 31

Tata Play Ltd Versus Sales Tax Officer Class II/ AVATO.

The HC held that the impugned show cause notice (SCN) issued under Section 73 of the CGST Act was within the prescribed limitation period, being dated ... Issuance of SCN within the period of limitation, as prescribed u/s 73 of the Central Goods and Service Tax Act, 2017 - adequate opportunity has been afforded to the Petitioner for filing a reply with respect to the impugned SCN and for participating in the personal hearings thereafter or not - principles of natural justice. Whether the impugned SCN was issued to the Petitioner within the period of limitation, as prescribed under Section 73 of the CGST Act? - HELD THAT:- Under the Scheme of Section 73 of the CGST Act, whenever it appears to the ‘proper officer’ that any tax has not been paid or short paid or has been erroneously refunded or where ITC has been wrongly availed or utilized, a notice can be served on the person chargeable with such tax, requiring to show cause as to why he should not pay the amount specified in the notice along with interest payable thereon. 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. In the facts of the present case, the period under Section 73(10), CGST Act, for issuance of the impugned order was to end on 28th February, 2025. Calculating backwards, the impugned SCN had to be issued at least three months prior to 28th February, 2025 i.e., there ought to be a clear three months period between the date of issuance of the impugned SCN and the outer limit for passing of the impugned order - upon a careful consideration of all the facts and circumstances of this case, read with all the relevant case laws, as relied upon by the parties, this Court is of the opinion that the issuance of the impugned SCN dated 30th November, 2024, is well within the stipulated time period of 3 three months before the passing of the impugned order dated 28th February, 2025. Thus, the impugned SCN and the impugned order, having been issued within the statutory limitations, are neither time barred nor issued without jurisdiction and are thus, not liable to be set aside on this ground. Whether adequate opportunity has been granted to the Petitioner for filing a reply to the impugned SCN and for participating in the personal hearing? - HELD THAT:- It is only upon sufficient cause being shown, that an adjournment of hearing can be granted by the proper officer. The proviso to the said provision states that a maximum of three adjournments can be granted in any circumstance - In the present case, for the first hearing, an adjournment was sought and the same was granted. For the second hearing, no adjournment appears to have been sought. In fact, in the reply dated 22nd January, 2025, even if it is presumed that the Petitioner sought a hearing, the hearing was granted on 27th January, 2025 but was not attended by the Petitioner. A conjoint reading of all the relevant notices along with the replies filed by the Petitioner would show that adequate opportunity has been granted by the Respondent-Department for filing of reply and for personal hearing. The interpretation given to Section 75(5), CGST Act, that a minimum of three adjournments ought to be granted is not tenable. In terms of the said provision, it is a maximum of three adjournments that can be granted upon showing sufficient cause and upon a request being made - this Court is of the view that entertaining the present writ petition is not warranted. This Court is not inclined to entertain the present writ petition. However, considering the nature of the demand raised in the impugned order, since the order is an appealable order, the Petitioner is permitted to avail of the appellate remedy by 31st August 2025, along with the necessary pre-deposit mandated under Section 107 of the CGST Act, in which case the appeal shall be adjudicated on merits and shall not be dismissed on the ground of limitation. Petition dismissed. ISSUES: Whether the impugned Show Cause Notice (SCN) was issued within the period of limitation prescribed under Section 73 of the Central Goods and Service Tax Act, 2017 (CGST Act)?Whether adequate opportunity, including personal hearing, was afforded to the petitioner in compliance with the principles of natural justice and the provisions of the CGST Act'Whether the writ petition is maintainable in view of the availability of statutory remedies under the CGST Act? RULINGS / HOLDINGS: On limitation: The Court held that the impugned SCN dated 30th November, 2024, was issued within the prescribed limitation period under Section 73(2) read with Section 73(10) of the CGST Act, interpreting 'three months' as 'three calendar months' as per the definition in the General Clauses Act and the Supreme Court's ruling in State of Himachal Pradesh v. Himachal Techno Engineers. Therefore, the SCN and consequent order are 'neither time barred nor issued without jurisdiction'.On opportunity for personal hearing: The Court found that adequate opportunity was granted to the petitioner for filing replies and for personal hearings, including an adjournment granted upon request. The petitioner failed to attend the scheduled personal hearing without seeking further adjournment. The Court held that the proviso to Section 75(5) CGST Act limits the maximum number of adjournments to three but does not mandate a minimum number, and that the right to personal hearing was not curtailed.On maintainability of writ petition: The Court ruled that since the impugned order is appealable under Section 107 of the CGST Act, the writ petition is not maintainable except under exceptional circumstances such as breach of fundamental rights or violation of natural justice, none of which were established. The petitioner was directed to avail the statutory appellate remedy. RATIONALE: The Court applied the statutory framework of Section 73 of the CGST Act, which mandates issuance of a show cause notice at least three months prior to the expiry of the three-year limitation period for passing an adjudication order. The Court relied on Section 73(2) and 73(10) of the CGST Act and interpreted the term 'three months' as calendar months in accordance with Section 3(35) of the General Clauses Act, 1897, and the Supreme Court's authoritative interpretation in State of Himachal Pradesh v. Himachal Techno Engineers.The Court distinguished the decision of the Andhra Pradesh High Court in M/s Cotton Corporation of India, holding that the limitation period must be strictly construed but that the issuance of the SCN on 30th November, 2024, was within the limitation period when calendar months are considered.Regarding opportunity for hearing, the Court emphasized the statutory scheme under Section 75(4) and (5) of the CGST Act, clarifying that adjournments are discretionary and conditional upon sufficient cause, with a maximum cap of three adjournments but no minimum entitlement to multiple adjournments. The Court found that the petitioner was afforded sufficient opportunity and failed to avail the personal hearing without adequate cause.On the writ petition's maintainability, the Court applied settled principles that writ petitions under Article 226 are not maintainable when adequate alternative statutory remedies exist, except in exceptional circumstances such as breach of fundamental rights or violation of natural justice. The Court cited authoritative precedent holding that appeal under Section 107 of the CGST Act is a full-fledged remedy capable of correcting errors of the adjudicating authority, including re-examination of facts and law.No dissent or doctrinal shift was noted; the Court followed established statutory interpretation and precedent.