TaxTMI 
TaxTMI 
2026 (9) TMI 1198
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....able person under the CGST and AGST Acts and is engaged in the business of wholesale/distribution of cellular phones. 3. The dispute relates to the financial year 2020-2021. The respondent had furnished its annual return in Form GSTR-9 and the reconciliation statement in Form GSTR-9C on 27.02.2022. Upon scrutiny of the returns and other records, including GSTR-1, GSTR-2A, GSTR-3B, E-Way bills, and other materials, the competent authority issued the impugned show cause notice dated 29.11.2024 under Section 73(1) of the CGST/AGST Act, proposing a total liability of Rs. 33,03,968/- besides interest and penalty on the allegation inter alia of wrongful/excess availment of Input Tax Credit (ITC) from cancelled dealers, returned defaulters, and nontaxpayers. 4. The principal challenge before the learned Single Judge was to the competence of the authority to issue the notice on 29.11.2024, as it was beyond the prescribed time limit under section 73(2), but not to the merits of the proposed demand. 5. The case of the appellant/writ petitioner is that Section 73(2) of the CGST/AGST Act expressly mandates that the notice under Section 73(1) of the CGST/AGST Act shall be issued "at le....
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....ral Clauses Act 1897 and the decision in Tarun Prasad Chatterjee v. Dinanath Sharma reported in (2000) 8 SCC 649 and Saketh India Ltd. And another -vs- India Securities Ltd., reported in (1999) 3 SCC 1, for the principle that where a period is prescribed from a particular date, the date from which the period commences is to be excluded. 12. Proceeding on that basis, the learned Single Judge treated the date of issuance of the show cause notice as the starting point of the period in question and, excluding that date, counted three calendar months thereafter. Since the notice was dated 29.11.2024, the three months were taken to comprise December 2024, January 2025, and February 2025, ending on 28.02.2025. 13. The learned Single Judge accordingly held that the notice dated 29.11.2024 could not be regarded as having been issued beyond the period prescribed under Section 73(2), as, on excluding the date of issuance and reckoning three calendar months thereafter, the period would expire on 28.02.2025. 14. During the pendency of the writ petition, an ex-parte order dated 28.02.2025, under Section 73(9) was determining the tax, penalty etc. Accordingly, by an interim order dated 1....
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....s been wrongly availed or utilised for any reason, other than the reason of fraud or any wilfulmisstatement or suppression of facts to evade tax, he shall serve notice on the person chargeable with tax which has not been so paid or which has been so short paid or to whom the refund has erroneously been made, or who has wrongly availed or utilised input tax credit, requiring him to show cause as to why he should not pay the amount specified in the notice along with interest payable thereon under section 50 and a penalty leviable under the provisions of this Act or the rules made thereunder. (2) The proper officer shall issue the notice under sub-section (1) at least three months prior to the time limit specified in sub-section (10) for issuance of an order. (9) The proper officer shall, after considering the representation, if any, made by the person chargeable with tax, determine the amount of tax, interest and a penalty equivalent to ten per cent. of tax or ten thousand rupees, whichever is higher, due from such person and issue an order. (10) The proper officer shall issue the order under sub-section (9) within three years from the due date for furnishi....
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....ncement of a statutory adjudicatory process which culminates in the determination and order contemplated under Sub-section 9 of Section 73 of the CGST/AGST Act, subject to the outer time limit prescribed under Sub-section 10 of Section 73 of the CGST/AGST Act. The scheme of Section 73 of the CGST/AGST Act establishes a statutory relationship between the commencement of proceedings by issuance of a notice under Section 73(1) and their culmination with the determination and order under Section 73(9). Section 73(2) regulates the former by prescribing an outer limit under Section 73(10). 25. Section 75 of the CGST/AGST Act supplements the aforesaid mechanism contained in Section 73 by laying down General provisions governing the determination. Therefore, for completeness, the relevant portion is reproduced: Section 75. General provisions relating to the determination of tax.- (1) Where the service of notice or issuance of order is stayed by an order of a court or Appellate Tribunal, the period of such stay shall be excluded in computing the period specified in sub-sections (2) and (10) of Section 73 or sub-sections (2) and (10) of Section 74 [or sub-sections (2)....
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.... the issuance of an order as connected parts of the same adjudicatory framework. 29. The principal question that arises for consideration is whether the expression "at least three months prior to the time limit specified in subsection (10) for issuance of order" necessarily requires the corresponding date falling exactly three calendar months before the terminal date to be treated as the last permissible date for issuance of notice. 30. The requirement under section 73(2), therefore, is intended to ensure that the initiation of proceedings is not so close to the statutory deadline that the intervening adjudicatory process becomes illusory or unduly curtailed. 31. Once the provision is understood in the aforesaid manner, the determination required is whether, in the present case, the period between the issuance of the notice dated 29-11-2024 and the expiry of the statutory timeline on 28-2-2025 constitutes three calendar months. In our considered opinion, it does. 32. It is not in dispute that the expression "month," in the absence of anything repugnant in the context, has to be understood in terms of section 3(35) of the General Clauses Act, namely, as a month reckoned ....
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....of computation, the requisite period is not curtailed in the present case. On the contrary, the statutory period contemplated under Section 73(2) remains available. 38. The construction suggested by the appellant would mean that although a notice issued on 29-11-2024 leaves the whole of December, January and February before the expiry of the terminal date, it would nevertheless be invalid merely because it was issued on a day after 28-11-2024. 39. Therefore, in our opinion, such a consequence does not necessarily follow from the language employed by the legislation. Section 73(2) has to be construed as a provision regulating the interval between the initiation under Section 73(1) and the culmination of the statutory adjudicatory process within the period prescribed under Section 73(10) and cannot be construed fixing an artificial corresponding date as an independent cut-off for issuance of notice. The provision does not say that corresponding date arrived at by counting backward is to be excluded. If that would have been the intention of the legislature, the legislature could have employed language clearly fixing such a date. 40. We are therefore of the considered opini....