Facts of the Case

The petitioner, C.H. Robinson Worldwide Freight India Private Limited, filed a writ petition challenging a Show Cause Notice dated 31.05.2024 issued by the CGST Delhi South for Financial Year 2019-20, proposing a demand of ₹11,85,45,612 on the ground of alleged wrongful availment of Input Tax Credit. Although the SCN bore the date 31.05.2024, it was undisputed that the notice was electronically issued only on 12.08.2024.

The Department sought to rely on Notification No. 56/2023-Central Tax dated 28.12.2023 issued under Section 168A of the CGST Act, which extended the outer time limit for passing orders under Section 73(10) for FY 2019-20 up to 31.08.2024. The petitioner contended that even with such extension, the mandatory requirement of issuing the SCN at least three months prior to the outer limit was violated. It was also contended that the SCN was dispatched to an incorrect address despite the petitioner’s address having been duly updated on the GST portal prior to dispatch.

Issues Involved

Whether the Show Cause Notice dated 31.05.2024 was barred by limitation under Section 73(2) read with Section 73(10) of the CGST Act, whether the mandatory three-month gap prescribed between issuance of SCN and the outer time limit for passing the order was complied with, whether technical glitches or administrative difficulties could override statutory limitation, and whether service at a wrong address vitiated the proceedings.

Petitioner’s Arguments

The petitioner argued that for FY 2019-20, even after extension of the outer limit for passing the order till 31.08.2024, the SCN ought to have been validly issued on or before 31.05.2024 to comply with the mandatory three-month requirement under Section 73(2). It was submitted that the SCN was admittedly issued only on 12.08.2024 and thus was hopelessly time-barred. The petitioner further contended that alleged technical glitches in issuing DRC-01 could not dilute statutory limitation and that service at an outdated address rendered the SCN invalid.

Respondent’s Arguments

The Revenue contended that the SCN was dated 31.05.2024 and that due to technical glitches in the GST portal, DRC-01 could not be issued earlier and was eventually issued on 12.08.2024. The Department also relied on internal instructions issued by CBIC and claimed that the SCN had been dispatched earlier on 03.06.2024. It was argued that the extension granted under Section 168A saved the limitation.

Court Order / Findings

The Delhi High Court examined Sections 73(2) and 73(10) of the CGST Act and reiterated the interpretation laid down in Tata Play Limited vs. Sales Tax Officer Class II/AVATO, holding that the three-month period prescribed under Section 73(2) is mandatory and is intended to provide a minimum opportunity to the assessee to respond to the SCN before adjudication.

The Court held that even after extension of the outer limit under Notification No. 56/2023, the SCN had to be validly issued at least three months prior to 31.08.2024. Issuance of the SCN on 12.08.2024 clearly violated the statutory mandate. The Court rejected the Department’s plea of technical glitch, holding that administrative or technical difficulties cannot override express statutory provisions. The Court also noted that the SCN was dispatched to an incorrect address despite prior updation, further vitiating service.

Important Clarification

The High Court clarified that the requirement under Section 73(2) of issuing a show cause notice at least three months prior to the limitation date under Section 73(10) is mandatory in nature. Extensions granted under Section 168A do not dispense with or dilute this requirement, and technical glitches cannot be used to cure statutory non-compliance.

Final Outcome

The writ petition was allowed. The Show Cause Notice dated 31.05.2024 (issued on 12.08.2024) and all consequential proceedings were quashed as being barred by limitation under Section 73(2) read with Section 73(10) of the CGST Act. Pending applications, if any, were also disposed of.

Source Link -  https://delhihighcourt.nic.in/app/showFileJudgment/75429102025CW155082024_123840.pdf

 

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