Tax Vista

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Edn. 272 - 26th January 2026

Kasi Viswanathan V

Three months or more than thirty days: reading timelines into Section 73 for adjudication

The Nagpur Bench of the Bombay High Court was confronted with a fundamental question under GST practice, namely whether Section 73 requires a compulsory gap of three months between issuance of a show cause notice and passing of the adjudication order. On facts, the notice was issued on 27-12-2023 and the order followed on 22-03-2024, leaving a gap of about two months and twenty-four days. The petitioner argued that Section 73 envisages a minimum three-month interval and, therefore, the order was unsustainable. Reliance was placed on C.H. Robinson Worldwide Freight India Private Limited [2025-VIL-1127-DEL], which in turn followed Tata Play Limited [2025-VIL-797-DEL], drawing support from M/s Cotton Corporation of India [2025-VIL-124-AP]. The Revenue, on the other hand, argued that the three-month reference in Section 73 operates only with respect to the outer date for issuance of notice.

The High Court accepted the petitioner's contention, relying on the observations in Tata Play and held that the object of Section 73(2) is to ensure that a registered person has at least three months available for filing a reply, for being heard and adjudicated in a meaningful manner. The Court reasoned that the intervening period necessarily involves compliance with principles of natural justice, grant of adjournments, service of a statement under Section 73(3), opportunity to make payment under Section 73(5) and, overall, an effective opportunity to contest the demand. If the three-month gap is not maintained, according to the Court, the statutory protection stands diluted. On this basis, the show cause notice and the consequential order were set aside, though the matter was remanded with a direction to proceed on the basis of the body of the order (impliedly treating the contents of the order as a notice).

From the judgment as reported, it is not clear whether a personal hearing was granted, or whether any reply, if filed, was considered. In the absence of these facts, the reasoning behind the direction to set aside the show cause notice itself is not decipherable.

Section 73(2) is a provision prescribing limitation for issuance of notice, by linking it to the time limit for passing an order under sub-section (10). The question is whether this reference, by itself, warrants reading into the statute a mandatory minimum gap of three months between notice and order in every case. The provision, on its plain language, does not do so.

What the scheme of Section 73 does provide is a specific gap of thirty days under sub-section (8), within which the registered person may discharge tax and interest after issuance of notice, leading to deemed conclusion of proceedings. The decisions relied upon by the High Court, including Tata Play and Cotton Corporation, were essentially concerned with question of whether the notices themselves were issued within the prescribed timelines. They did not have occasion to deal with issue as to whether the statute presupposes a mandatory three-month gap between issuance of notice and passing of adjudication order. The observations in paragraph 25 of Tata Play referring to Section 73(3) and Section 73(5) were also not made in the context of laying down a mandatory time gap between the show cause notice and the adjudication order. Section 73(3) deals with issuance of a statement for subsequent periods on the same issue and does not govern the adjudication timeline of the original notice. Section 73(5) contemplates payment before issuance of notice and, therefore, has no bearing on the post-notice adjudicatory window. The only provision that squarely regulates the post-notice stage is Section 73(8), which envisages a thirty-day window.

The emphasis placed by the High Court in the present case on ensuring a meaningful opportunity to the noticee is undoubtedly significant. However, the statute does not stipulate a fixed three-month duration. As long as a reasonable opportunity to reply is afforded, the reply is considered, and a hearing is granted and availed, the requirement of the provision stands satisfied. Perhaps, non-compliance with any of these aspects could have been a reason in the present case for the Court to take the view that three months time-gap would have been appropriate, though the factual basis for such an approach is not discernible from the judgment as reported.

Section 73 does not prescribe a specific time for filing a reply, but it clearly contemplates reasonableness, not rigidity. In this backdrop, the view that the thirty-day period under Section 73(8) represents the minimum assured post-notice protection, as articulated in Raymond Limited [2023-VIL-806-MP], appears to align more closely with the statutory design than importing a mandatory three-month rule into the adjudicatory process.

Section 74 is structured on similar lines, albeit with a longer six-month period from the date of issuance of notice. Construing six months as a mandatory minimum gap would have far reaching implications. Section 74A, on the other hand, provides greater clarity by expressly stipulating twelve months as the outer limit for passing the order from the date of issuance of notice. [2026-VIL-54-BOM]

Date of notification: document date or publication date?

The writ petitions arose from a batch of importers challenging paragraph 2 of Notification No. 38/2015-2020 dated 05.02.2016 issued by Directorate General of Foreign Trade (DGFT). The said para 2 enabled transitional relaxation from Minimum Import Price (MIP) condition for imports covered by letters of credit entered into before the date of the notification. On 05.02.2016, DGFT uploaded the notification on its website introducing MIP for specified steel products. A Trade Notice dated 10.02.2016 clarified certain queries raised by importers. The notification itself was published in the Gazette of India only on 11.02.2016.

Paragraph 2 of the notification provided that imports or shipments under irrevocable letters of credit entered into before the date of the notification would be exempt from the MIP condition, subject to paragraph 1.05(b) of the Foreign Trade Policy 2015-20. The petitioners had entered into firm contracts with foreign suppliers between 29.01.2016 and 04.02.2016 and opened irrevocable letters of credit on 05.02.2016. Although registration was applied for with the jurisdictional regional authority in terms of para 1.05(b), it was denied on the ground that the letters of credit were not opened prior to 05.02.2016.

The petitioners contended that the notification could not be treated as effective from 05.02.2016 since it was admittedly published in the Official Gazette only on 11.02.2016, and therefore the benefit of transitional protection could not be denied to letters of credit opened prior to that date. The High Court, while holding that the notification would operate prospectively only from 11.02.2016, nevertheless concluded that uploading of the notification on 05.02.2016 constituted sufficient notice to bind importers and, therefore, the relaxation under paragraph 2 would apply only to letters of credit entered into prior to 05.02.2016. The Petitioners filed SLP challenging the said High Court judgement.

The Supreme Court reversed this view by placing emphasis on Section 3 of the Foreign Trade (Development and Regulation) Act, 1992, which mandates that any order regulating imports or exports must be published in the Official Gazette. Applying settled principles governing promulgation of delegated legislation and specific requirement in the parent Act of publication, the Court held that the notification (delegated legislation) could not have acquired the force of law prior to its publication on 11.02.2016. The notification itself acknowledged this position by stating that it was "to be published in the Gazette of India". Until such publication, the Notification had not crossed the threshold from intention to obligation. In law, the notification was born only upon its publication, and it is from that date alone that rights could be curtailed or obligations imposed.

The Supreme Court further observed that the benefit of the transitional provision contained in paragraph 1.05(b) of the FTP could not be denied to the appellants, as doing so would defeat the plain language of the policy, undermine the object of the parent Act, and introduce uncertainty in an area where certainty is indispensable. Once it is held that the notification acquires force of law only upon its publication on 11.02.2016, the expression "date of this notification" appearing in paragraph 2 necessarily had to be construed as the date of its publication in the Official Gazette.

There was no dispute regarding effective date and prospective application of the notification from 11.02.2016. The real issue was up to which point (imports made under LoCs prior to 05.02.2016 or 11.02.2016) transitional protection under paragraph 2 would remain available. Paragraph 2 referred to letters of credit entered into before 05.02.2016, the Trade Notice dated 10.02.2016 had also clarified, in response to a specific query, that imports under letters of credit issued on 05.02.2016 would not be permitted for clearance. The Supreme Court's interpretation effectively neutralized this position by holding that the cut-off date in paragraph 2 must align with the date on which the notification acquired statutory force.

From a broader perspective, it is relevant to note that several notifications under indirect tax laws expressly provide that timelines or benefits are to be reckoned 'from' or 'up to' the date of publication of the notification. Where a notification uses the expression "date of notification", it is ordinarily understood as the date borne on the document, while the date of publication governs its enforceability. Paragraph 1.05(b) of the FTP itself operates subject to the words "unless otherwise stipulated", and there are instances where DGFT notifications have expressly excluded its application. Seen in this light, the High Court's view that paragraph 2 operated as a stipulation to the contrary under paragraph 1.05(b) aligns with the policy framework. The reference to paragraph 1.05(b) in paragraph 2 is for the purpose of registration, and for confining the exemption to the balance value and quantity available and the time period of the letter of credit. The Supreme Court, however, appears to have proceeded on the premise that such a stipulation could not, in any event, operate prior to the publication of the notification.

An important consequence of construing the "date of notification" as the date of publication also arises in the context of validity. Paragraph 1(c) of the notification provided that it would remain in force for six months. Applying the same reasoning, the notification would remain valid till 10.08.2016 rather than 04.08.2016, since the six-month period would have to be computed from the date on which the notification acquired the force of law. [2026-VIL-07-SC-CU]

(The views expressed are personal. The author can be reached for feedback or queries on v.k.vishwa@gmail.com)