GST Act | Three-Month Limit U/S 73(2) For Department To Issue SCN Is Mandatory, 'Technical Glitch' No Excuse: Delhi High Court
The Delhi High Court has held that the time limit set out under 73(2) of the Goods and Services Tax Act for issuance of show cause notice in relation to alleged short payment of tax, etc. is mandatory in nature, and cannot be excused on account of technical glitches on GST portal.A division bench of Justices Prathiba M. Singh and Shail Jain thus quashed a SCN issued after the 3-month...
The Delhi High Court has held that the time limit set out under 73(2) of the Goods and Services Tax Act for issuance of show cause notice in relation to alleged short payment of tax, etc. is mandatory in nature, and cannot be excused on account of technical glitches on GST portal.
A division bench of Justices Prathiba M. Singh and Shail Jain thus quashed a SCN issued after the 3-month gap prescribed under the provision.
For context, Section 73(2) of the GST Act stipulates that show cause notice would have to be issued at least three months prior to the time limit specified in Section 73(10) for issuance of the order.
Section 73(10) stipulates that the assessment order would have to be issued within three years from the due date for furnishing of annual return for the said financial year.
In the case at hand however, the minimum period of three months required prior to the time limit prescribed under Section 73(10) was not adhered to.
Petitioner-assessee argued that the SCN ought to have been issued by 31st May, 2024, since the demand was raised on the ground of wrongful availment of Input Tax Credit in respect of the Financial Year 2019-20. However, the SCN was issued only on 12th August, 2024.
The Department on the other submitted that there was a technical glitch due to which DRC-01 (Demand and Recovery Certificate attached with SCN) could not be issued in time.
The High Court however held,
“The purpose of Section 73(2) of the CGST Act has been clearly held to provide the minimum period of three months to the assessee for filing the reply to the SCN. The three month's period prescribed in Section 73(2) of the CGST Act is mandatory when read with Section 73(10) of the CGST Act. Accordingly, in the present case, the Department's stand that due to a technical glitch, the DRC-01 could not be issued on 31st May, 2024 but was reissued on 12th August, 2024 would not be tenable in law.”
It thus quashed the SCN.
Appearance: Mr. Kamal Sawhney, Mr. Deepak Thackur, Ms. Akansha Wadhwani and Mr. Rishab Mishra, Advs. for Petitioner; Mr. Atul Tripathi, SSC, CBIC with Ms. Jyotsana, Mr. Shubham Mishra and Mr. Gaurav Mani Tripathi, Advs. Mr. Sumit K. Batra, Adv. for GNCTD. Mr. Puneet Yadav Adv. for UOI. Mr. Tushar Sannu and Mr. Fajallu Rehman, Advs. for R. 3&4.
Case title: C.H. Robinson Worldwide Freight India Private Limited v. Additional Commissioner, Cgst-Delhi-South & Ors.
Citation: 2025 LiveLaw (Del) 1506
Case no.: W.P.(C) 15508/2024