Phrase ‘Three Months’ U/S 73(2) GST Act Means Three Calendar Months, Not 90 Days: Delhi High Court
The Delhi High Court has held that the ‘three months’ period prior to expiry of three years within which show cause notice for alleged wrongful availment of Input Tax Credit must be issued under Section 73 of the CGST Act, means three calendar months and not 90 days.
Under Section 73, SCN is issued to an assessee for determination of tax not paid or short paid.
The Proper Officer is required to issue a SCN, specifically mentioning the reason(s) and the circumstances why the provision has been set into motion.
The SCN, as per sub-section (2) has to be issued at least three months prior to the time limit specified in sub-section (10) for issuance of order.
Sub-section (10) stipulates 3 years time, from the due date for furnishing the annual returns for the financial year in question, for passing an order.
A division bench of Justices Prathiba M. Singh and Rajneesh Kumar Gupta observed,
“While the purpose behind Section 73(10) of the CGST Act is to fix the date by which an adjudication order has to be issued, the purpose of Section 73(2) of the CGST Act is to ensure that at least three months is available to the taxable person for filing a reply to the show cause notice issued to them and for being heard in a proper manner…the expression ‘three months’ has to be reckoned and interpreted as three calendar months and not as 90 days.”
The controversy arose as the Petitioner-Tata Play which is engaged in the business of providing DTH broadcasting services, challenged the SCN issued to it by the Respondent- Sales Tax Officer for the tax period April 2020 to March 2021, as time-barred.
As the last date for furnishing of returns for FY 2020-21 was extended till 28th February, 2022, it was submitted that the three year period for passing the impugned order in this case expired on 28th February, 2025.
Thus, it was contended that the period for issuing SCN came to an end on 28th November, 2024, i.e. 90 days prior to three years period.
The impugned SCN was issued on 30th November, 2024.
Respondent-Department on the other hand contended that as per Section 73(10) of CGST Act, the necessary order in the present set of facts could have been passed till 28th February, 2025 and thus, last date of issuing impugned SCN is three months prior to 28th February, 2025 that is 30th November, 2024.
It was submitted that the time of ‘three months’ is to be interpreted as ‘three calendar months’ and thus 3 months prior to 28th February, 2025 would come to 30th November, 2024.
In other words, the Department contended that the date of 28th February, 2025, being the last date of the month, the month of February, 2025 is to be calculated as one month, month of January, 2025 is to be calculated as second month and month of December, 2024 is to be calculated as third month.
The High Court relied on State of Himachal Pradesh & Anr. vs. Himachal Techno Engineers & Anr., (2010) where the Supreme Court had referred to the definition of ‘month’, as stipulated in the General Clauses Act which reads as: “month” shall mean a month reckoned according to the British calendar.”
“Thus, a period of three months would mean three British calendar months i.e., December, 2024, January, 2025 and February, 2025,” the High Court ruled.
As a corollary, it held that the issuance of the impugned SCN dated 30th November, 2024, is well within the stipulated time period of 3 three months before the passing of the impugned order dated 28th February, 2025.
As such, the Court dismissed the assessee’s challenge.
Appearance: Mr. Gautam Narayan, Senior Advocate with Mr. Anirudh Bakhru, Mr. Victor Das, Mr. Vipul singha and ms. Anwesh Padhi, Advocates for Petitioner; MS. Vaishali Gupta, Panel Counsel (Civil) GNCTD.
Case title: Tata Play Ltd v. Sales Tax Officer Class II/ Avato
Case no.: W.P.(C) 4781/2025