The Gauhati High Court clarified the computation of the limitation period for issuing a show cause notice under Section 73(2) of the CGST and AGST Acts, holding that the notice dated 29 November 2024 was within time because three calendar months are available after excluding the date of notice. The Court rejected the appellant’s corresponding-date approach, emphasizing that the provision requires a minimum adjudicatory interval, not a fixed cut-off date.
Background & Facts
The Dispute
The appellant, Surya Business Private Limited, a GST-registered dealer engaged in the wholesale/distribution of cellular phones from Gar Ali, Jorhat, Assam, challenged a show cause notice dated 29 November 2024 issued under Section 73(1) read with Section 73(2) of the Central Goods and Services Tax Act, 2017 (CGST Act) and the Assam Goods and Services Tax Act, 2017 (AGST Act). The notice alleged wrongful/excess availment of Input Tax Credit (ITC) from cancelled dealers, returned defaulters and non-taxpayers for the financial year 2020-21 and proposed a total liability of Rs. 33,03,968 besides interest and penalty.
Key Facts
- The appellant filed its annual return in Form GSTR-9 and the reconciliation statement in Form GSTR-9C on 27 February 2022 for FY 2020-21.
- Upon scrutiny of returns, GSTR-1, GSTR-2A, GSTR-3B, E-Way bills and other records, the competent authority issued the impugned show cause notice on 29 November 2024.
- The notice proposed a tax demand of Rs. 33,03,968 together with interest under Section 50 and a penalty equivalent to the higher of ten percent of tax or Rs. 10,000.
- The appellant contended that the notice was issued beyond the period prescribed under Section 73(2) because, for FY 2020-21, the due date for furnishing the annual return was 28 February 2022, making the outer limit for issuance of the order under Section 73(9) 28 February 2025; three months prior to that date would be 28 November 2024, and a notice issued on 29 November 2024 was therefore one day late.
- The revenue argued that the notice was within time because, when the date of issuance (29 November 2024) is excluded, the three-month period runs through December 2024, January 2025 and February 2025, expiring on 28 February 2025.
- During the pendency of the writ petition, an ex-parte order dated 28 February 2025 was passed under Section 73(9) determining tax, penalty etc., and an interim order dated 12 February 2025 directed the respondents not to take any coercive action.
- It is also noted that an amount of Rs. 10 lakhs had already been recovered from the appellant after the pronouncement of the single-judge judgment.
Procedural History
- 27.02.2022: Filing of GSTR-9 and GSTR-9C for FY 2020-21.
- 29.11.2024: Issuance of the show cause notice under Section 73(1) CGST/AGST Act.
- 12.02.2025: Interim order by the learned Single Judge staying coercive action.
- 28.02.2025: Ex-parte order under Section 73(9) determining tax and penalty.
- 12.02.2026: Judgment and order of the learned Single Judge in WP(C) No. 6666/2024 dismissing the writ petition and upholding the notice as timely.
- 13.08.2026: Date on which judgment was reserved in the intra-court appeal.
- 15.09.2026: Date of pronouncement of the judgment of the Division Bench.
- 28.02.2025: Also noted as the date by which the order under Section 73(9) would be issued (outer limit).
Relief Sought
The appellant sought to have the show cause notice dated 29 November 2024 quashed, the Single Judge’s order dated 12 February 2026 set aside, and a direction that no further proceedings be taken under the notice. In the alternative, the appellant sought an opportunity to file a reply to the notice and to have the adjudicatory proceedings conducted afresh.
The Legal Issue
The central question was whether the expression “at least three months prior to the time limit specified in sub-section (10) for issuance of an order” under Section 73(2) of the CGST/AGST Act requires the notice to be issued exactly three calendar months before the terminal date (the corresponding-date approach) or whether the requirement is satisfied if three calendar months are available after excluding the date of notice, thereby ensuring a minimum adjudicatory interval before the outer limit for passing the order.
Arguments Presented
For the Appellant
The appellant relied on the principle that where a period is prescribed “from a specified date”, the starting date is excluded, and applied it backward from the outer limit of 28 February 2025 to arrive at 28 November 2024 as the last permissible date for issuance of notice. Citing the decisions in Dodds - Vs- Waker (1981) 2 All ER 609, Bibi Salma Khatoon - Vs- State of Bihar (2001) 7 SCC 197 and State of Himachal Pradesh - Vs- Himachal Techno-Engineers (2010) 12 SCC 210, the appellant argued that a notice issued on 29 November 2024 was one day beyond limitation and therefore void. The appellant further contended that the expression “at least three months” could not reduce the statutory interval, and that the corresponding-date principle must be applied mechanically to avoid rendering the provision illusory.
For the Respondent
The respondents, led by the Additional Advocate General, maintained that the notice was within time because the three-month period is computed by excluding the date of issuance and counting calendar months thereafter. They relied on Section 3(35) of the General Clauses Act, 1897, which defines a “month” as a month reckoned according to the British calendar, and on the principle enunciated in Tarun Prasad Chatterjee - Vs- Dinanath Sharma (2000) 8 SCC 649 and Saketh India Ltd. - Vs- India Securities Ltd. (1999) 3 SCC 1, that where a period is prescribed from a particular date, the date from which the period commences is ordinarily excluded. The respondents argued that the provision guarantees a minimum adjudicatory interval, not a fixed cut-off date, and that the learned Single Judge’s interpretation was consistent with the statutory object of ensuring an effective opportunity to contest the demand.
The Court's Analysis
The Division Bench began by noting that there was no dispute over the relevant terminal date for the order under Section 73(9) being 28 February 2025, nor over the meaning of “month” as a calendar month under Section 3(35) of the General Clauses Act. It affirmed the learned Single Judge’s finding that the date of issuance of the notice is to be excluded when computing the period thereafter, a principle settled by Section 9 of the General Clauses Act and reinforced by authorities such as Tarun Prasad Chatterjee.
The Court then turned to the appellant’s corresponding-date argument. It observed that Section 73(2) does not prescribe an independent period of limitation expiring on a corresponding date; rather, it stipulates the minimum interval that must be available between the initiation of proceedings (notice under Section 73(1)) and the outer limit fixed for culmination (order under Section 73(9)). The Bench held that the requirement is satisfied if three calendar months are available after excluding the day on which the notice is issued and before the statutory terminal date.
In the present case, excluding 29 November 2024 left the months of December 2024, January 2025 and February 2025, which indeed constitute three calendar months ending on 28 February 2025. Consequently, the notice was not beyond the period contemplated under Section 73(2). The Court emphasized that the expression “at least” merely guarantees that the minimum statutory period cannot be reduced; it does not impose a rigidity that would invalidate a notice issued on any day after the corresponding date.
The Bench further noted that applying the corresponding-date principle mechanically would introduce a degree of rigidity not contemplated by the legislature. Had the legislature intended to fix a corresponding date as an independent cut-off, it could have employed language clearly to that effect. Since Section 73(2) merely regulates the interval between initiation and culmination within the period prescribed under Section 73(10), the view taken by the learned Single Judge suffers from no legal infirmity.
The Court also considered the decisions relied upon by the parties. While the corresponding-date principle offers one possible method of computation, where another construction consistent with the rule of exclusion of the first date and with the statutory object of ensuring a minimum adjudicatory interval is reasonably possible, the view adopted by the learned Single Judge cannot be said to suffer from any legal infirmity warranting interference in an intra-court appeal.
"We are therefore of the considered opinion that the learned single judge was justified in holding that the notice dated 29-11-2024 was not beyond the period contemplated under Section 73(2)."
Accordingly, the Division Bench found no reason to interfere with the judgment and order dated 12.02.2026 passed by the learned Single Judge in WP(C) No. 6666/2024 and dismissed the writ appeal. However, to meet the ends of justice, the Court directed that the appellant be given an opportunity to contest the notice by filing a reply within four weeks from the date of the judgment (15 September 2026), with the entire proceeding to be completed within three months thereafter if a reply is filed; otherwise, the order dated 28.02.2025 would revive and the revenue authority would proceed in accordance with the AGST/CGST Act. The interim order dated 12.02.2025 was to stand vacated and parties were to bear their own costs.
The Verdict
The Division Bench dismissed the intra-court appeal, upholding the Single Judge’s order dated 12 February 2026 that the show cause notice dated 29 November 2024 was issued within time under Section 73(2) of the CGST/AGST Act. The Court vacated the interim order of 12 February 2025 and directed the appellant to file a reply to the notice within four weeks from 15 September 2026; if a reply is filed, the adjudicatory proceedings shall be completed within three months thereafter, failing which the order of 28 February 2025 shall revive. Parties shall bear their own costs. No monetary compensation or penalty was altered by this judgment.
What This Means For Similar Cases
The Minimum Interval Principle Trumps Fixed Dates
The judgment makes clear that Section 73(2) guarantees a minimum adjudicatory interval, not a specific cut-off date. Practitioners must compute the three-month period by excluding the date of notice and counting calendar months forward; a notice issued any day after the corresponding date is not automatically invalid so long as three full calendar months remain before the outer limit for passing the order.
Calendar Months, Not Days, Govern the Computation
Relying on Section 3(35) of the General Clauses Act, the Court reiterated that a “month” means a calendar month. Consequently, the computation must follow the British calendar (Gregorian) and cannot be reduced to a notional 90-day period. This approach ensures that months with varying lengths are respected, preventing artificial shortening of the statutory window.
Opportunity to Contest Must Be Preserved
Even while upholding the notice as timely, the Court exercised its discretion to afford the appellant a chance to file a reply within four weeks and to complete the proceedings within three months thereafter. This underscores that, where a notice is marginally close to the limitation period, courts may still intervene to protect the right to be heard, provided the statutory interval is not violated.
