M/S. The Cotton Corporation Of INDIA vs. Assistant Commissioner (St) (Audit)(Fac)

State of Andhra Pradesh, Rep.by its Chief Secretary and Special Chief Secretary To Government (FAC), State Tax Department, Velagapudi, Amaravathi, Guntur District.

Union of India, Rep. by its Secretary, Government of India, Ministry of Finance, 3^^ Floor, Jeevan Deep Building, Sansad Marg New Delhi-110 001. ... Respondents Date of Judgment pronounced on : 05-02-2025 HON’BLE SRI JUSTICE R. RAGHUNANDAN RAO HON’BLE SRI JUSTICE HARINATH N.

State of Andhra Pradesh, Rep.by its Chief Secretary and Special Chief Secretary To Government (FAC), State Tax Department, Velagapudi, Amaravathi, Guntur District.

Union of India, Rep. by its Secretary, Government of India, Ministry of Finance, 3^^ Floor, Jeevan Deep Building, Sansad Marg, New Delhi-110 001. ... Respondents : Karthik Ramana Puttamreddy ! Counsel for petitioner : G.P. for Commercial Tax ''Counsel for Respondents <GIST >HEAD NOTE: ? Cases referred;

The aforesaid notice, is challenged by the petitioner in the present Writ Petition.

The contention of the petitioner, as enunciated by Sri P. Karthik Ramana is as follows: Section 73(10) of the APGST Act, stipulates that the assessment order, in relation to any assessment year, would have to be issued within three years from the due date for furnishing of annual return for the said financial year. Section 73(2) of the APGST Act stipulates that the notice under sub- section(l) which initiates the assessment proceedings, would have to be issued at least three months prior to the time limit specified in sub-section(IO) for issuance of the order. Rule 81-A of the CGST Rules, which would be applicable to the proceedings under APGST Act, stipulates that the due date for filing the annual return, under Section 44 of the GST Act, for the financial year 2020- 2021 would be the 28‘^ day of February, 2022. A conjoint reading of these provisions would make it amply clear that the last date for issuance of a show cause notice, for the assessment year 2020-2021 would be the 28*'^ day of November, 2024. As the show cause notice has been issued on 30.11.2024, the same is beyond time and is non est. Reliance is placed on the Judgment of the Hon’ble Supreme Court in the State Another^ and the Judgment of the House of Lords in the case of Dodds vs Walker^

The learned Government Pleader would contend that a “month would mean “a calendar month”. As the 28*'^ of February is the end of the month of February, the last date of issuance of a notice would have of December, 2024 or at the worst of November, 2024. As the notice has been issued on 30.11.2024, it would be within limitation. Further, the provisions of Section 73(2) can at best be treated as a directory requirement and not a mandatory requirement whose violation would render the proceedings non est. Sri P. Karthik Ramana, learned counsel for the petitioner would 6. contend that the provisions of Section 73(2) of the GST Act, are mandatory. He makes this submission on the ground that the word used in Section 73(2) is shall” and the same would have to be treated as a mandatory requirement. He would also contend that the legislature, in its wi om, had determined that there should be a minimum period available to the tax payer to set out its case in the case of any show cause notice being issued in an assessment proceeding. He would draw the attention of this Court to Section 75 of the GST Act, which has certain inherent safeguards such as the requirement of a personal hearing and the facility of seeking adjournments thrice before a tax payer can be required to compulsorily attend before the authorities. He would (2010) 12 see 210 ^1981(2) W.L.R.609(HL)

The Hon’ble Supreme Court, while considering this issue and after noticing that Section 3(35) of the General Clauses Act, 1897 defines a “month” under the Landlord and Tenant Act, 1954 had observed as follows; This simple general rule which Cockburn C J. in Freeman v. Read (1863) 4 B. AND S. 174, 184 described as being “in accordance with common usage ... and with the sense of mankind,” works perfectly well without need for any modification so long as there is in the month in which the notice expires a day which bears the same number as the day of the month on which the notice was given. Such was the instant case and such will be every other case except for notices given on the 31st of a 31 day month and expiring in a 30 day month or in February, and notices expiring in February and given on the 30th or the 29th (except in leap year) of any other month of the year. In these exceptional cases, the modification of the corresponding date rule that is called for is also well established: the period given by the notice ends upon the last day of the month in which the notice expires.

The aforesaid Judgments clearly laid down the principle that when a period, available for a certain action, is defined in terms of months, it would mean that the corresponding date of the corresponding month would be the cutoff date. In the present case, the cutoff date for issuing an order is 28.02.2025. The three months period which would elapse from this date would be 28.11.2024. Since the notice was issued on 30.11.2024, it would be beyond the time stipulated under Section 73(2) of the GST Act.

The next issue that remains before this Court is whether the delay of two days in issuing the said notice can be condoned or whether the issue is not relevant as the provision is only directory.

As pointed out by the learned counsel, the GST Act has put in place certain protections for tax payers. One of the primary protections orders cannot be passed against the tax payers, beyond the periods stipulated in the Act. It is settled law that these periods of limitation is that are mandatory and not orders can be passed beyond the periods set out in the Act. In such a situation, it would be difficult to hold that the stipulation as to the period of initiation, of such proceedings, by issuance of a show cause notice, would only be directory and not mandatory.

Another way of looking at this issue is the purpose for which such limitation has been prescribed under the Act. Section 75 of the GST Act stipulates that the tax payer is not only entitled to a notice before assessment is carried out but also the right of personal hearing, irrespective of whether such persohal hearing is requested. When there is a possibility of adverse order being passed against tax payer, the facility of obtaining at least three adjournments for personal hearing etc. The said provisions, protecting the interest of the tax payer, would be rendered any an otiose if notice should protections can then be bypassed by the authorities issuing show cause notice with a week’s time or 10 days and calling upon tax payer to put forth his objections permitted to be sent without a minimum waiting period. The said in that shortened time. That does not appear to be intent of the provisions of Section 75(2) or Section 73 (10) of the GST Act.

For all the aforesaid reasons, we would have to hold that the time permit set out under 73(2) of the Act is mandatory and any violation of that time period cannot be condoned, and would render the show cause notice otiose. Accordingly, this Writ petition is allowed quashing the show cause notice, dated 30.11.2024, issued by the 1st respondent, under Section 73 of the Central Goods and Services Tax Act and Andhra Pradesh Goods and Services Tax Act, 2017. There shall be no order as to costs.

As a sequel, pending miscellaneous petitions, if any, shall stand closed. N. NAGAMMA ASSISTANT REGISTRAR //// SECTT^ OFFICER One Fair Copy to the HON’BLE SRI JUSTICE R. RAGHUNANDAN RAO (For His Lordship’s kind perusal) One Fair Copy to the HON’BLE SRI JUSTICE HARINATH.N (For His Lordship’s kind perusal) To,

One CC to Sri P. Ponna Rao, Deputy Solicitor General of India (OPUC) 7. 9 L.R. Copies.

The Under Secretary Union of India, Ministry of Law, Justice & Company Affairs, New Delhi.

The Secretary, A.P. High Court Advocates Association, High Court of A.P. at Amaravati, Guntur District. 10.Three C.D. Copies. Cnr