2026-VIL-757-MAD
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SGST High Court Cases

GST - Statutory Interpretation of Section 73(2) CGST Act - Time limit for issuance of show-cause notice and assessment order - Petitioner challenged two assessment orders passed for same period contending that Section 73(2) requires minimum three month gap between show-cause notice and assessment order and orders - Whether Section 73(2) requires three month interval between issuance of show-cause notice and assessment order or whether it relates to timing of show-cause notice relative to limitation deadline - HELD - Section 73(2) must be interpreted in light of Section 73(10) which prescribes three year limitation period for issuance of order from due date of annual return. The provision in Section 73(2) requiring show-cause notice to be issued at least three months prior to time limit specified in Section 73(10) is intended to ensure that SCN is issued not less than three months before the limitation period for adjudication expires. The object and purpose is to prevent proper officer from issuing show-cause notice close to expiry of limitation deadline and thereafter hastily concluding adjudication without reasonable opportunity to taxpayer - The provision does not mandate a mandatory three month interval between issuance of show-cause notice and issuance of assessment order. Even if SCN was issued more than three months before limitation period deadline, the assessment order can be issued after reasonable interval without strict compliance of three month period between SCN and order. A reasonable interval between show-cause notice and order is required to provide taxpayer with meaningful opportunity to respond and contest proposals – The view taken by Bombay High Court in AM Market Places case that Section 73(2) prescribes three month interval between SCN and order is not endorsed – The writ petitions are disposed of - Assessment - Contradictory Premises in Separate Orders - Two assessment orders were passed for same assessment period in separate writ petitions. First order proceeded on premise that supplies were exempt and petitioner wrongly availed input tax credit in respect of exempt supplies, while the second order proceeded on contrary premise that supplies are taxable and not exempt - Whether adjudicating authority can pass contradictory orders for same assessment period based on contradictory treatment of whether supplies are exempt or taxable - HELD - Two orders proceeding on mutually contradictory and inconsistent premises regarding character of supplies cannot stand together for same assessment period. The first order assuming supplies are exempt supplies while second order assumes supplies are taxable supplies are inconsistent and contradictory - There is merit in petitioner's contention that orders are contradictory and cannot be sustained in their present form. Such contradictory orders require fresh consideration and re-adjudication to ensure consistency - Both impugned orders are set aside and remanded for reconsideration. Proper officer shall examine whether supplies are exempt or taxable and pass fresh order consistently applicable to entire assessment period after providing reasonable opportunity to petitioner.
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