Issuance of SCN Under GST – Section 73(10) with Time Limits

The Hon’ble Kerala High Court in Pappachan Chakkiath v. Assistant Commissioner & Anr. [WP(C) NO. 816 of 2023 dated January 11, 2023] ruled that if the time restrictions for issuing the order under Section 73(10) of the Central Goods and Services Tax Act, 2017 (“the CGST Act”) for the Fiscal year 2017-18 is postponed till 30th September 2023, the SCN may also be issued until September 30, 2023, which is the sole interpretation that may be made under the terms of Section 73(2) of the CGST Act. Furthermore, it was decided that there was no ambiguity in the provisions that called for the use of any norms of interpretation in the assessee’s favour.

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GST SCN Issuance Timeline Facts

Pappachan Chakkiath (the Petitioner), has filed the petition contending the order (impugned order) issued via the revenue department (respondent) under Section 73 of the CGST Act, in which the total liability of Rs 9,70,596 was charged to the applicant for the Central Goods and Services Tax (“CGST”) and State Goods and Services Tax (“SGST”) subjected to be paid for the duration from July 2017 to March 2018 on the basis that the impugned order was not held with jurisdiction since the time duration for the SCN issuance was not get extended according to Notification No. 13/2022- Central Tax dated July 5, 2022 (“the Impugned Notification”) in which the time duration for the issuance of the order for the Fiscal year 2017-18 was being extended upto 30th September 2023.

Furthermore, because the Impugned Notification only relates to the deadline for the issuance of the order, the entire proceeding must be declared to be without jurisdiction because the liability under the Impugned Order was imposed with respect to the F.Y. 2017–18 if the SCN was not issued within the time frame specified in Section 73(2) read with Section 73(10) of the CGST Act.

Issues of GST SCN Under Section 73(2)

Does the contested notification also extend the deadline for the issuing of show cause notice(SCN) under Section 73(2) of the CGST Act?

Kerala High Court Judgment Over GST SCN

In WP(C) NO. 816 of 2023, the Honorable Kerala High Court made the following rulings:

• Interpreted Section 73 of the CGST Act and remarked that, the SCN is to be allocated under Section 73(2) of the CGST Act, at least 3 months before the time limit mentioned in Section 73(10) of the CGST Act, for issuance of the order.
• According to the opinion, when the deadline for issuance of an order under Section 73(10) of the CGST Act is extended until September 30, 2023, Section 73(2) of the CGST Act can only be interpreted as allowing the SCN to be issued with reference to September 30, 2023, and not with reference to any other date.
• It was decided that there was no ambiguity in the provisions that called for the application of any norms of interpretation in the petitioner’s favour.
• Furthermore, it was decided that there was no basis for the Petitioner’s claim that the Impugned Order was issued without proper authority under Article 226 of the Indian Constitution.
• The time for filing the appeal may be extended for two weeks; if the appeal is filed within that time, it will be treated as one that was filed in time, and the Appellate Authority will consider it on the basis of its merits. This is because the petitioner’s right to appeal expires today, and the petitioner has come to this court for this writ petition.

Appropriate Provisions Under Section of 73 CGST Act

“Determination of tax not paid or short paid or erroneously refunded or input tax credit wrongly availed or utilised for any reason other than fraud or any wilful-misstatement or suppression of facts.

• Where it appears to the proper officer that any tax has not been paid or short paid or erroneously refunded, or where GST ITC has been wrongly availed or utilised for any reason, other than the reason of fraud or any wilful-misstatement or suppression of facts to evade tax, he shall serve notice on the person chargeable with tax which has not been so paid or which has been so short paid or to whom the refund has erroneously been made, or who has wrongly availed or utilised input tax credit, requiring him to show cause as to why he should not pay the amount specified in the notice along with interest payable thereon under section 50 and a penalty leviable under the provisions of this Act or the rules made thereunder.
• The proper officer shall issue the notice under sub-section (1) at least three months prior to the time limit specified in sub-section (10) for issuance of the order.
• Where a notice has been issued for any period under sub-section (1), the proper officer may serve a statement, containing the details of tax not paid or short paid or erroneously refunded or input tax credit wrongly availed or utilised for such periods other than those covered under sub-section (1), on the person chargeable with tax.
• The service of such statement shall be deemed to be service of notice on such person under sub-section (1), subject to the condition that the grounds relied upon for such tax periods other than those covered under sub-section (1) are the same as are mentioned in the earlier notice.
• The person chargeable with tax may, before service of notice under sub-section (1) or, as the case may be, the statement under sub-section (3), pay the amount of tax along with interest payable thereon under section 50 on the basis of his own ascertainment of such tax or the tax as ascertained by the proper officer and inform the proper officer in writing of such payment.
• The proper officer, on receipt of such information, shall not serve any notice under sub-section (1) or, as the case may be, the statement under sub-section (3), in respect of the tax so paid or any penalty payable under the provisions of this Act or the rules made thereunder.
• Where the proper officer is of the opinion that the amount paid under sub-section (5) falls short of the amount actually payable, he shall proceed to issue the notice as provided for in subsection (1) in respect of such amount which falls short of the amount actually payable.
• Where any person chargeable with tax under sub-section (1) or sub-section (3) pays the said tax along with interest payable under section 50 within thirty days of the issue of show cause notice, no penalty shall be payable and all proceedings in respect of the said notice shall be deemed to be concluded.
• The proper officer shall, after considering the representation, if any, made by a person chargeable with tax, determine the amount of tax, interest and a penalty equivalent to ten per cent. of tax or ten thousand rupees, whichever is higher, due from such person and issue an order.
• The proper officer shall issue the order under sub-section (9) within three years from the due date for furnishing of the annual return for the financial year to which the tax not paid or short paid or input tax credit wrongly availed or utilised relates to or within three years from the date of erroneous refund.
• Notwithstanding anything contained in sub-section (6) or sub-section (8), penalty under sub-section (9) shall be payable where any amount of self-assessed tax or any amount collected as tax has not been paid within a period of thirty days from the due date of payment of such tax.”