Extension Of Limitation To Issue Order Under S. 73 Of CGST Act Would Also Extend Time Limit To Issue SCN: Kerala High Court

The bench of Justice Gopinath P. was dealing with a writ petition challenging an order passed under Section 73 of the CGST/SGST Act on the ground that the show cause notice was not issued within the time specified under Section 73(2).

Dismissing the writ petition, the Court noted that as per the CBIC notification dated 05.07.2022, the time limit for issuing an order under Section 73(10), for the relevant financial year, has been extended up to 30.09.2023. In view of the provisions of Section 73(2), the show cause notice can also be issued with reference to the date 30.09.2023 and not with reference to any other date, the Court has held.

The Court further remarked that there is no ambiguity in the provisions of Section 73 of the CGST Act which requires the Court to apply any rule of interpretation in favour of the assessee.

Section 73 (10) of the CGST Act provides the time limit for passing an order raising a demand of GST, interest and penalty on the tax payer in specified cases, including where the proper officer is of the opinion that GST has not been paid or has been short paid, or erroneously refunded. As per Section 73(10), the said order must be issued within 3 years from the due date of furnishing the annual return for the relevant financial year to which the tax relates.

Section 73(2) provides that the proper officer must issue a show cause notice on the tax payer at least 3 months prior to the time limit specified under Section 73(10) for issuance of order.

The petitioner, Pappachan Chakkiath, filed a writ petition before the Kerala High Court, challenging the order passed by the Assistant Commissioner under Section 73 of the CGST/SGST Acts imposing a liability towards CGST and SGST on the petitioner.

The petitioner argued before the High Court that since the entire proceedings initiated against the petitioner under Section 73 were without jurisdiction, therefore, notwithstanding the availability of an alternate remedy, the petitioner was entitled to challenge the order by invoking the writ jurisdiction of the High Court under Article 226 of the Constitution of India.

The petitioner submitted before the Court that tax liability was imposed on him in respect to the financial year 2017-2018.

In view of the Notification No. 13/2022-Central Tax, dated 05.07.2022, issued by the Central Board of Indirect Taxes and Customs (CBIC), the time limit under Section 73(10) for issuance of order in respect of financial year 2017-18, has been extended up to 30.09.2023, the petitioner conceded.

However, the petitioner averred that the time limit for issue of show cause notice under Section 73 (2), has not been extended.

The petitioner, Pappachan Chakkiath, contended that since the show cause notice was not issued within the time specified under Section 73(2) read with Section 73(10), the entire proceedings initiated against him were without jurisdiction.

The petitioner pleaded that the relevant notification has been issued by the CBIC under Section 168A of the CGST Act. It added that a notification under Section 168A can be issued only in extraordinary circumstances. Since the notification only extends the time limit for issuing an order and does not specify whether the time limit for issue of show cause notice has also been extended, it must be held that the time limit for issue of notice has not been extended, the petitioner contended.

The petitioner, Pappachan Chakkiath, added that when there is ambiguity in the provisions of a taxing statute, the law must be interpreted in favour of the assessee and against the revenue.

The revenue department submitted that when the time limit for issuance of an order under Section 73(10) stands extended, the time limit for issuance of show cause notice under Section 73(2) automatically stands extended.

Referring to the provisions of Section 73 of the CGST/SGST Act, the Court reiterated that the show cause notice has to be issued at least 3 months prior to the time limit specified in Section 73(10) for issuance of order.

Perusing the CBIC notification dated 05.07.2022, the Court concluded: “When the time limit for issuance order under sub-section (10) of Section 73 for the financial year 2017-18 has been extended upto 30.09.2023, the only interpretation that can be placed on the provisions of sub-section (2) of Section 73 is that, the show cause notice can also be issued with reference to the date 30.09.2023 and not with reference to any other date.”

The bench added that there is absolutely no ambiguity in the provisions of Section 73 which requires the Court to apply any rule of interpretation in favour of the assessee.

The Court referred to the decision of the Supreme Court in Commissioner of Customs (Import), Mumbai v. M/s. Dilip Kumar and Company & Ors. (2018), where the Apex Court had clarified the “plain meaning rule or clear and unambiguous rule” with respect to a tax law. The Supreme Court had held that when the language in the statute is plain and unambiguous, the Court has to read and understand the plain language as such. There is no scope for any interpretation in such cases, the Apex Court had ruled.

The High Court thus concluded: “Therefore, I am of the view that the petitioner has not made out any case for interference under Article 226 of the Constitution of India as I cannot find that the impugned orders are issued without jurisdiction. The writ petition fails. It is accordingly dismissed.”

The Court thus dismissed the writ petition, while permitting the petitioner to file an appeal before the Appellate Authority within two weeks.

Case Title: Pappachan Chakkiath versus Assistant Commissioner & Ors.

Dated: 11.01.2023 (Kerala, Ernakulam)

Counsel for the Petitioner: Yash Thomas Mannully, Soman P. Paul

Counsel for the Respondent: Adv. Thushara James, Sr. Government Pleader

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