The Gauhati High Court ruled that a Show Cause Notice (SCN) issued on November 29, 2024, was valid and within the limitation period under Section 73 of the CGST/AGST Act. This decision involved M/s Surya Business Private Limited, a wholesale distributor of mobile phones in Assam, which had filed its Annual Return (GSTR-9) and GSTR-9C for the fiscal year 2020-21 on February 27, 2022. The Assistant Commissioner of State Tax alleged that the company under-declared its tax liability and wrongly availed Input Tax Credit (ITC) from cancelled dealers and defaulters.
The SCN demanded approximately ₹33.03 lakhs plus interest and penalty. The company challenged the notice, claiming it was issued one day late and sought its quashing in the High Court. The key issue was whether the SCN met the requirement of being issued "at least three months prior" to the last date for passing an order under Section 73.
The court noted that the due date for filing the Annual Return for FY 2020-21 was extended to February 28, 2022, making the three-year limit for passing an order expire on February 28, 2025. Applying the General Clauses Act, the court determined that a "month" means a calendar month and excluded the date of issuing the notice while including the last date. Using the corresponding date rule, the court concluded that December 2024, January 2025, and February 2025 constituted the required three months. Thus, the SCN issued on November 29, 2024, complied with Section 73 and was deemed legally valid.
Order Date - 12 February 2026
Parties : M/s Surya Business Private Limited Vs The State of Assam represented by its Commissioner and Secretary to the Government of Assam, The Assistant Commissioner of State Tax and The Commissioner of State Taxes, Assam
Facts -
- M/s Surya Business Private Limited, a wholesale distributor of mobile phones in Assam, was registered under GST and filed its Annual Return (GSTR-9) and GSTR-9C for FY 2020-21 on 27-02-2022.
- After examining returns and records, the Assistant Commissioner of State Tax, Jorhat alleged that the petitioner had under-declared tax liability and wrongly availed ITC from cancelled dealers and defaulters.
- A Show Cause Notice (SCN) dated 29-11-2024 under Section 73 was issued demanding about ₹33.03 lakhs plus interest and penalty.
- Claiming that the SCN was issued one day late, the petitioner approached the High Court seeking to quash the notice.
Issue -
- Whether a Show Cause Notice issued on 29-11-2024 satisfied the statutory requirement of being issued “at least three months prior” to the last date for passing an order under Section 73?
Order -
- The Court noted that since the due date for filing the Annual Return for FY 2020-21 was extended to 28-02-2022, the three-year limit for passing an order expired on 28-02-2025.
- Applying the General Clauses Act, the Court held that a “month” means a calendar month and that while calculating limitation, the date of issuing the notice is excluded but the last date is included.
- Using the corresponding date rule, the Court found that December 2024, January 2025, and February 2025 together constituted the required three months.
- Therefore, even a notice issued on 29-11-2024 (or even 30-11-2024) complied with Section 73, making the SCN legally valid.
