Time Permit U/s 73(2) Of GST Act Is Mandatory & Any Violation Of Such Time Period Cannot Be Condoned: Andhra Pradesh High Court
The Andhra Pradesh High Court allowed a Writ Petition of a company registered under the APGST Act, against a show-cause notice issued to it.
The Andhra Pradesh High Court held that time permit under Section 73(2) of the Andhra Pradesh Goods and Services Tax Act, 2017 (APGST) is mandatory and any violation of such time period cannot be condoned.
The Court held thus in a Writ Petition filed by a company registered under the APGST Act, challenging a show-cause notice issued to it under Section 73(1) read with Rule 142 of the APGST Rules.
A Division Bench comprising Justice R. Raghunandan Rao and Justice Harinath N. held, “… 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.”
The issue before the Bench was 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.
Advocate Karthik Ramana Puttamreddy appeared for the Petitioner while Government Pleader (GP) appeared for the Respondents.
Brief Facts
The Petitioner-company received a show-cause notice in relation to the Assessment Year (AY) 2020-2021, calling upon to show cause why an assessment should not be carried out in relation to short payment of tax, etc. This notice was challenged by the Petitioner before the High Court. It was contended by the counsel for the Petitioner that the last date for issuance of a show cause notice, for the AY 2020-2021 would be the 28th day of November, 2024 and as the show cause notice was issued on November 30, 2024, the same is beyond time and is non est. Whereas, the GP for the Respondents submitted that a ‘month’ would mean “a calendar month”. It was further argued that, as the 28th of February is the end of the month of February, the last date of issuance of a notice would have 1st of December, 2024 or at the worst 30th of November, 2024.
Reasoning
The High Court after hearing the contentions of the counsel, noted, “As pointed out by the learned counsel, the GST Act, has put in place certain protections for tax payers. One of the primary protections is that orders cannot be passed against the tax payers, beyond the periods stipulated in the Act. It is settled law that these periods of limitation 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.”
The Court further noted that Section 75 of the GST Act, stipulates that the tax payer is not only entitled to a notice before any assessment is carried out but also the right of personal hearing, irrespective of whether such personal hearing is requested and when there is a possibility of an adverse Order being passed against tax payer, the facility of obtaining at least three adjournments for personal hearing etc.
The Court said that the provisions protecting the interest of the tax payer, would be rendered otiose if notice is permitted to be sent without a minimum waiting period.
“The said 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 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”, it added.
Accordingly, the High Court allowed the Writ Petition and quashed the show-cause notice.
Cause Title- M/s. The Cotton Corporation of India v. Assistant Commissioner (ST) (Audit) (FAC) & Ors. (Case Number: W.P.No.1463 of 2025)
