2024 (2) TMI 353 - HC - GST

Time Limitation - validity of orders passed by the 1st respondent under Section 73(9) of the Central Goods and Services Tax Act, 2017 - HELD THAT - As per sub-section (2) of section 73, notice has to be issued three months prior to the limitation period prescribed under sub-section (10) of section 73. The proceedings were initiated by notice dated 29/9/2023. Ext. P5 order under Section 73(9) of the CGST Act was passed on 3/11/2023. It is apparent therefore that the thirty-day period that is envisaged from the date of the notice under Section 73(2) is for the purpose of enabling an assessee to pay tax along with interest payable under Section 50 so as to avoid the payment of penalty. This opportunity was not extended to the appellant herein and virtually amounted to non-compliance with the mandatory procedure envisaged under the Statute. Further, since the last date for passing the order under Section 73(9) expired on 31/12/2023, the finding of the learned Single Judge that virtually grants an opportunity to the respondents to overcome their lapses by extending the time limit for passing the order under Section 73(9) of the CGST Act, cannot be granted. Since the terminal for passing the order under Section 73(9) expired on 31/12/2023 and it was found that Ext. P5 order was passed on 3/11/2023 without complying with the mandatory procedure under Section 73(5) and (8) of the CGST Act, and further, the said defect cannot now be cured since any fresh order passed under Section 73(9) would be beyond 31/12/2023. Appeal allowed.

Summary

Issues:
The issues involved in this case are the challenge to orders passed under Section 73(9) of the Central Goods and Services Tax Act, 2017 (CGST Act) mainly on the ground of limitation and violation of principles of natural justice.

Issue 1: Challenge to Orders under Section 73(9) of the CGST Act

The appellant, a registered dealer under the CGST/SGST Act, 2017, challenged orders passed by the 1st respondent under Section 73(9) of the CGST Act concerning discrepancies in returns for the financial year 2017-18. The appellant contended that the orders were not properly communicated as they were only uploaded on his GST web portal. The 1st respondent issued a show cause notice under Section 73(1) alleging input tax discrepancies and subsequently passed assessment orders (Exts. P5 and P6) demanding tax, interest, and penalty for the year 2017-2018. The appellant challenged these orders on grounds of limitation and violation of natural justice. The learned Single Judge found that the appellant was not given sufficient time to reply to the notice, thereby violating principles of natural justice. The Single Judge set aside the orders and remitted the matter back to the 1st respondent for a fresh order after providing adequate opportunity for the appellant to respond and be heard.

Issue 2: Compliance with Statutory Provisions

The scrutiny of the appellant's return under Section 61 of the CGST Act began with a notice issued on 29/9/2023, requiring the appellant to respond within a statutory period. However, a show cause notice under Section 73(1) was issued on 30/9/2023, potentially bypassing the statutory time limit. The statutory provision mandates that notice under Section 73(2) should be issued three months before the limitation period prescribed under Section 73(10). The appellant was not given the opportunity to pay tax with interest within thirty days of the show cause notice as required under Section 73(5) and (8). The order under Section 73(9) was passed on 3/11/2023, before the deadline of 31/12/2023. The learned Judges found that the non-compliance with the mandatory procedure under the statute could not be rectified by extending the time limit for passing the order. Consequently, the judgment of the Single Judge was set aside, and the writ petition was allowed by quashing the assessment orders (Exts. P5 and P6).

This summary highlights the challenge to orders under Section 73(9) of the CGST Act based on limitation and natural justice violations, as well as the importance of complying with statutory provisions in tax assessments.