Surya Business Private Limited vs. The State Of Assam And 2 Ors

Held

The Court held that the show cause notice dated 29.11.2024 was not issued beyond the period contemplated under Section 73(2) of the CGST/AGST Act. The learned Single Judge correctly determined that the terminal date for issuing the order under Section 73(9) was 28.02.2025. The Court agreed that the expression 'three months' refers to calendar months and that the principle of excluding the first day of the period applies. By excluding the date of issuance (29.11.2024), the period of three calendar months (December 2024, January 2025, and February 2025) was available before the statutory terminal date of 28.02.2025. The Court rejected the appellant's argument based on the 'corresponding date principle' applied backward, finding it too rigid and not in line with the statutory object of ensuring a minimum adjudicatory interval. The Court found no legal infirmity in the Single Judge's decision. However, to meet the ends of justice, the Court set aside the ex-parte order dated 28.02.2025 and granted the appellant an opportunity to file a reply to the show cause notice within four weeks, with further proceedings to be completed within three months thereafter.

Facts

The appellant, Surya Business Private Limited, is challenging a show cause notice dated 29.11.2024 issued under Section 73(1) of the CGST/AGST Act, 2017. The notice proposed a tax liability of Rs. 33,03,968/- for the financial year 2020-2021, alleging wrongful availment of Input Tax Credit (ITC) from canceled dealers, returned defaulters, and non-taxpayers. The appellant's primary contention before the High Court was that the show cause notice was issued beyond the time limit prescribed under Section 73(2) of the CGST/AGST Act. The learned Single Judge dismissed the writ petition, upholding the validity of the notice. This intra-court appeal is against that dismissal. An ex-parte order under Section 73(9) was passed during the pendency of the writ petition, and Rs. 10 Lakhs have been recovered.

Key Issues

1. Whether the show cause notice dated 29.11.2024, issued under Section 73(1) of the CGST/AGST Act, 2017, for the financial year 2020-2021, was issued beyond the time limit prescribed under Section 73(2) of the said Acts? The appellant argued that Section 73(2) mandates that the notice must be issued at least three months prior to the time limit specified in Section 73(10) for issuing an order. For the financial year 2020-2021, the due date for the order under Section 73(9) was 28.02.2025. Therefore, three months prior to this date would be 28.11.2024. The notice issued on 29.11.2024 was thus beyond this period. The revenue contended that the notice was within time. They argued that the date of issuance of the notice should be excluded, and three calendar months thereafter would end on 28.02.2025. Thus, the notice dated 29.11.2024 was within the prescribed period.