Reasonable time period is 30 days for filing reply to the Show Cause Notice

The Hon'ble Madhya Pradesh High Court in the case of M/s. Raymond Ltd. v. Union of India [WP No. 26693 of 2022 dated November 20, 2023] allowed the writ petition and held that, the Reasonable time period for filing reply to the SCN is to be considered as 30 days as no reasonable opportunity of being heard was granted by the Revenue Department to the Assessee when the Impugned Order has been passed within nine days of issuance of SCN.

Facts

M/s. Raymond Ltd. ("the Petitioner") filed a writ petition for setting aside of Show Cause Notice dated September 03, 2022 ("the Impugned SCN") issued by the Revenue Department ("the Respondent") and subsequent order of demand dated September 12, 2022 ("the Impugned Order") issued under Section 73 of the Central Goods and Services Act, 2017 ("the CGST Act") contending that, no reasonable opportunity of hearing was granted to the Petitioner as the Impugned Order was passed within nine days of issuance of the Impugned SCN. Also, it was contended that the Impugned SCN is vague in nature.

Issue

Whether order can be passed within nine days of issuance of SCN?

Held

The Hon'ble Madhya Pradesh High Court in the case of WP No. 26693 of 2022 held as under:

• Observed that, Section 73 of the CGST Act is applicable in cases other than cases of fraud or wilful misstatement or suppression of facts wherein Section 73(1) of the CGST Act, states that the notice should be served to the taxpayer in cases where the tax has not been paid or shortly paid or being beneficiary of erroneous refund or wrongful availing or utilization of Input Tax Credit. Also, it is mandatory to issue the notice at least three months prior to the time limit stated in sub-section (10) of Section 73 of the CGST Act.
• Further observed that, Section 73(3) of the CGST Act states that after the issuance of notice u/s 73(1) of the CGST Act, the proper officer may serve a statement mentioning details of tax not paid/short paid/ erroneous refund or Input Tax Credit wrongly availed or utilized for time period other than the time period in Section 73(1) of the CGST Act. Further sub-section (5), (6), (7), and (9) of Section 73 of the CGST Act stipulate that the opportunity should be given by way of issuing SCN to Noticee for depositing tax, interest and benefit stated in the SCN, within 30 days and the effect on taxpayer post compliance, part-compliance and non-compliance.
• Noted that, Section 73(1) of the CGST Act, grants the opportunity to the Noticee to respond as to why the Noticee should not pay the amount specified in the SCN along with interest and penalty. Also, the Reasonable time-period for reply to the SCN is to be considered as 30 days.
• Further Noted that, any SCN issued under section 73 of the CGST Act, or otherwise, should contain enough or adequate material based on which the proceeding have been initiated against the Noticee. The SCN is subject to judicial review in cases where the SCN is vague in nature.
• Opined that, the gap period between issuance of Impugned SCN and Impugned Order is only 8 days, therefore, no reasonable opportunity of being heard is being granted by the Respondent to the Petitioner.
• Held that, Impugned SCN and Impugned Order is set aside. However, liberty was granted to the Respondent for issuance of fresh legal and valid SCN and thereafter proceed in the matter, thereby granting reasonable and sufficient opportunity to the Petitioner. Hence, the writ petition is allowed.
• Directed that, the Petitioner is entitled to the cost of Rs.10,000/- which has to be paid by the Respondent by way of depositing the said amount in the bank account of the Petitioner within 60 days.