Andhra Pradesh High Court quashes GST show cause notice citing delay beyond statutory Limit; reaffirms importance of timely action under GST Law.
Introduction
In a landmark judgment reinforcing the sanctity of statutory timelines under the Goods and Services Tax (GST) regime, the Hon’ble High Court of Andhra Pradesh in Cotton Corporation of India vs. Assistant Commissioner (ST) (Audit) (FAC), W.P. No. 1463 of 2025, quashed a show cause notice (SCN) issued beyond the legally prescribed time limit. The Court categorically held that time limits for issuing SCNs under Section 73 of the CGST Act are mandatory, and any delay, even by a couple of days, renders the notice otiose and unenforceable.
Background of the Case
The Cotton Corporation of India, a registered taxpayer under the Andhra Pradesh Goods and Services Tax Act, 2017, was issued a Show Cause Notice dated 30th November 2024 concerning alleged short payment of tax for the Financial Year 2020–21. The notice was issued under Section 73(1) of the CGST Act read with Rule 142 of the APGST Rules, which governs demands where fraud is not alleged.
As per the statutory scheme, Section 73(10) of the CGST Act mandates that the final adjudication order must be passed within three years from the due date for furnishing the annual return for the relevant financial year. In this case, the due date for filing the annual return was 28th February 2022, making the last permissible date for passing the order 28th February 2025.
Further, Section 73(2) requires that the SCN initiating the assessment process must be issued at least three months prior to the deadline for passing the order. Hence, the cutoff date for issuing the SCN was 28th November 2024.
Key Legal Issues and Arguments
The petitioner challenged the validity of the SCN on the ground that it was issued two days after the statutory deadline. Counsel for the Corporation argued that the limitation period under Section 73(2) is not directory, but mandatory, supported by the use of the word “shall” and the legislative intent to provide a minimum time window for responding to tax notices.
In response, the GST department contended that the term “month” in the statute should be interpreted as a calendar month, and hence the SCN issued on 30th November 2024 was within the acceptable timeframe. It further submitted that even if there was a minor delay, it should not vitiate the entire proceeding since the provision is merely procedural.
Court’s Analysis and Decision
The Division Bench comprising Justices R. Raghunandan Rao and Harinath N. rejected the department’s arguments and ruled in favour of the assessee. Citing precedent from the Supreme Court in Himachal Pradesh v. Himachal Techno Engineers (2010) 12 SCC 210, the Court emphasized that statutory periods defined in terms of “months” must adhere to the corresponding calendar date in the final month, not merely the end of the month.
The Court observed that:
“The word ‘shall’ in Section 73(2) denotes a mandatory obligation. The statutory framework under GST law incorporates several taxpayer safeguards, including the right to notice, the right to a personal hearing under Section 75, and provision for adjournments. These protections would be rendered meaningless if show cause notices could be issued without adhering to the minimum response period envisioned by law.”
Accordingly, the SCN issued on 30th November 2024, instead of the statutory deadline of 28th November 2024, was held to be invalid and unenforceable. The writ petition was allowed, and the notice was quashed.
Implications and Legislative Context
This judgment carries significant implications for both taxpayers and tax authorities. It reinforces that timelines under GST law are not flexible guidelines but mandatory procedural safeguards. Authorities must strictly comply with limitation provisions under Sections 73, 74, and 74A of the CGST Act. These provisions aim to ensure procedural fairness, avoid indefinite litigations, and safeguard the rights of taxpayers against delayed departmental actions.
Conclusion
The Andhra Pradesh High Court’s judgment in Cotton Corporation of India sets a strong precedent in tax jurisprudence, underlining that justice under GST is closely tied to the clock. Taxpayers and practitioners alike must take note: every day matters, and the protection of procedural rights is as important as the merits of the tax demand itself.
Article is written by CA Ankit Karanpuria and CA. Ankush Karanpuria The author can be reached at karanpuriaankit@gmail.com
The views expressed in the above article are personal and for information purpose. The reader is required to take decision based on his own judgment and analysis. Writer shall not be responsible for any decision taken by the reader in the subject matter.