Agenda
Legal Provisions Salient provisions Precautions Case Studies
Legal Provisions (1/4)
Tax not / short paid or erroneously refunded or ITC wrongly availed / utilised- No fraud/ suppression of facts involved – notice to be issued and order passed within 3 years from the due date, for filing Annual Return (Penalty equivalen To 10% tax amt.)
[Sec.73 (1) & (10)]
Notice to be issued 3 months prior to last date of issue of order
[Sec. 73 (2)]
Legal Provisions (2/4)
Tax not / short paid or erroneously refunded or ITC wrongly availed / utilised- fraud/ suppression of facts involved – notice to be issued and order passed within 5 years from the due date, for filing Annual Return (Penalty equv. To tax amt.) [Sec.74((1)& (10)]
Notice to be issued 6 months prior to last date of issue of order[Sec.74(2)]
Legal Provisions (3/4)
(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. [Sec. 73(10)]
Legal Provisions (4/4)
(10) The proper officer shall issue the order under sub-section (9) within a period of five 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 five years from the date of erroneous refund. [Sec. 74(10)]
Time Limit for SCN and OiO- Sec. 73
Time Limit for SCN and OIO- Sec. 74
Salient Points
For Taxpayers
Single SCN for multiple F.Ys. is against the scheme under the GST Act.
It creates practical challenges as each F.Y. have distinct timelines, tax positions, exemptions, and statutory requirements.
Creates difficulties in preparing an appropriate response, leading to higher legal expenses and delays in the resolution of disputes.
It may be convenient for Dept. but not within the legal framework;
For GST Department
Single SCN can be issued for multiple F.Ys., as there is no bar u/s 73/74 of the CGST Act 2017.
Convenient for all, if the issue is same and more so if all the F.Ys.
Covered in the SCN are within limitation;
Each F.Y. will have separate timeline and can be decided accordingly;
GST Provisions specifically requires issuance of Notice for each F.Y.;
The phrase used is –“ …….officer shall issue the order …….. annual return for the financial year to which the tax not paid
Limitation is counted from due date of Annual Return-separately for each F.Y.;
Annual Return is a consolidated Return for a Particular F.Y.
There may be situations, where in a single notice- one F.Y. may be covered u/s 74 and other u/s. 73;
Sometimes clubbing of F.Ys. may not be having any impact on liabilities;
In Terms of GST law
GST council in its Meeting held on 18.02.2023 had observed that it may not be desirable to extend the timelines in such a manner so that it may lead to bunching of last date of issuance of SCN/order made under Section 73 and 74 for a number of financial years and accordingly extended the limitation separately for each financial year.
The law does not explicitly prohibit a consolidated SCN for multiple periods or years. However, procedural compliance and clarity are crucial to avoid disputes.
High Courts have set aside such SCNs, despite the prevailing practice during earlier regime;
In Terms of GST law
Rationale applied by High Court during judgment
There is no express provision to allow issuance of a single notice for multiple years;
Issuance of demand is a substantive action, hence, it has to be strictly within expressed provisions, absence of bar for such SCNs may not justify action.
Contrarily, a plain reading of Sec. 73/74 indicates a strong ground for separate SCN;
Tax laws must be interpreted strictly based on what is expressly stated- No implied meanings.
Implied meanings can be taken only when express provisions are absent or ambiguous
Important points during Litigation
State of J&K and ors. Vs. Caltex India (Ltd.)-Civil Appeal No. 864 of 1964, Dated 17/12/1965
The issue was related to Sales Tax on Petrol and allied products;
For Part period the Tax was leviable but for majority period demand was invalid;
In this backdrop the bunching of F.Ys was held impermissible;
All H.C.s have relied on this judgment.
There is no judgment/Order by S.C. on this issue- GST Matters;
A High Court judgments by Tamil Nadu and Karnataka provides a persuasive value to other High Courts as well
