Time limit for issuance of SCN for F.Y. 2017-18 is extended till June 30, 2023

The Hon'ble Kerala High Court in PappachanChakkiath v. Assistant Commissioner & Anr. [WP(C) NO. 816 of 2023 dated January 11, 2023] has held that, when the time limit for issuance of order under Section 73(10) of the Central Goods and Services Tax Act, 2017 ("the CGST Act") for the Financial Year ("F.Y.") 2017-18 is extended upto September 30, 2023, the only interpretation that can be placed on the provisions of Section 73(2) of the CGST Act is that, the SCN can also be issued till September 30, 2023. Further held that, there is no ambiguity in the provisions which requires to apply any rules of interpretation in favour of the assessee. 

Facts

This petition has been filed by PappachanChakkiath ("the Petitioner) challenging the order ("the Impugned Order") passed by the Revenue Department ("the Respondent") under Section 73 of the CGST Act, wherein, a total liability of INR 9,70,596/- was imposed on the Petitioner towards Central Goods and Services Tax ("CGST") and State Goods and Services Tax ("SGST") payable for the period from July 2017 to March 2018, on the grounds that the Impugned Order was without jurisdiction as the time limit for issuance of SCN was not extended as per Notification No. 13/2022- Central Taxdated July 5, 2022 ("the Impugned Notification") wherein, the time limit for issuance of an order for F.Y. 2017-18 was extended upto September 30, 2023. 

Further, the Impugned Notification relates only to the time limit for issuance of order and therefore, unless the SCN was issued within the time specified in Section 73(2) read with Section 73(10) of the CGST Act, the entire proceedings have to be declared as without jurisdiction as the liability under the Impugned Order was imposed w.r.t. the F.Y. 2017-18. 

Issue

Whether the time limit for issuance of SCN under Section 73(2) of the CGST Act is also extended by virtue of the Impugned Notification?

Held

The Hon'ble Kerala High Court in WP(C) NO. 816 of 2023 held as under:

• Analyzed Section 73 of the CGST Act and noted that, the SCN is to be issued under Section 73(2) of the CGST Act, at least three months prior to the time limit specified in Section 73(10) of the CGST Act, for issuance of order.
• Opined that, when the time limit for issuance of order under Section 73(10) of the CGST Act is extended upto September 30, 2023, the only interpretation that can be placed with respect to Section 73(2) of the CGST Act is that, the SCN can be issued with reference to the date September 30, 2023 and not with reference to any other date.
• Held that, there is no ambiguity in the provisions which requires to apply any rules of interpretation in favour of the Petitioner. 
• Further held that, the Petitioner has not made out any case for interference under Article 226 of the Constitution of India that the Impugned Order was issued without jurisdiction.
• Directed that, as the Petitioner's remedy to appeal expires today and the Petitioner has approached this court for this writ petition, therefore, the time for filing the appeal may be extended for two weeks and if such appeal is filed within the period of two weeks, the same shall be treated as one filed in time and the Appellate Authority shall consider the same on merits. 

Relevant Provisions

Section 73 of the 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.

(1) Where it appears to the proper officer that any tax has not been paid or short paid or erroneously refunded, or where input tax credit 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.

(2) 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 order.

(3) 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.

(4) 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.

(5) 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.

(6) 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.

(7) 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 sub-section (1) in respect of such amount which falls short of the amount actually payable.

(8) 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 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.

(9) The proper officer shall, after considering the representation, if any, made by 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.

(10) The proper officer shall issue the order under sub-section (9) within three years from the due date for furnishing of 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.

(11) 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."