In a significant ruling impacting GST litigation in case of Tata Play Ltd vs. Sales Tax Officer, the Delhi High Court has held that the limitation period for issuing a Show Cause Notice (SCN) under Section 73(2) of the CGST Act is to be interpreted as three calendar months, and not merely 90 days. This judgment came in the case of Tata Play Ltd vs. Sales Tax Officer and provides critical clarity on procedural timelines under GST.
Case Background: Tata Play Challenges SCN Issuance
The petitioner, Tata Play Limited, a company engaged in providing Direct-to-Home (DTH) broadcasting services, challenged the SCN dated November 30, 2024, and the subsequent demand order dated February 28, 2025, issued by the Sales Tax Officer (AVATO), Trade and Taxes Department, New Delhi, for the FY 2020–21.
Tata Play contended that the SCN was time-barred as per Section 73 of the CGST Act, especially in light of the extended deadline for filing the annual return for FY 2020-21 to February 28, 2022, vide Notification No. 40/2021 – Central Tax dated December 29, 2021. According to their calculation, the SCN should have been issued by November 28, 2024.
Key Legal Issue: ‘Three Months’ vs. ’90 Days’
The core dispute revolved around the interpretation of the term “three months” mentioned in Section 73(2). The petitioner argued it meant 90 days, while the department argued for an interpretation of three calendar months, counting backward from the final date for order issuance under Section 73(10).
Delhi High Court’s Observations & Ruling
The Hon’ble Court dismissed the writ petition (W.P.(C) 4781/2025 & CM APPL. 22012/2025), upholding the department’s interpretation. The bench made the following key observations:
- Three Calendar Months Interpretation Upheld
Relying on the Supreme Court’s ruling in Himachal Techno Engineers v. Union of India [(2010) 12 SCC 210], and the General Clauses Act, the Court held that the term “month” must be read as a calendar month, not as a fixed period of 30 days. - SCN Issued Within Time Limit
Counting backward from February 28, 2025, the three calendar months are December 2024, January 2025, and February 2025. Therefore, an SCN issued on November 30, 2024, satisfies the statutory requirement under Section 73(2). - Even Under 90-Day Test, SCN Valid
The Court noted that even if the petitioner’s interpretation of 90 days were considered, the SCN dated November 30, 2024, was still within 90 days of the order date (February 28, 2025).
Personal Hearing: No Violation of Natural Justice
The petitioner also alleged denial of proper opportunity for a personal hearing, which the Court firmly rejected:
- The hearing, originally fixed for January 17, 2025, was rescheduled to January 27, 2025 at Tata Play’s request.
- The petitioner failed to appear for the rescheduled date and did not seek any further adjournment.
- Under Section 75(5) of the CGST Act, a maximum of three adjournments is allowed, but there is no minimum requirement.
- The Court held that the petitioner had sufficient opportunity and failed to exercise it diligently.
Premature Writ Petition: Appellate Remedy Available
The Court further stated that the writ petition was premature, as Tata Play had an alternative appellate remedy under Section 107 of the CGST Act. Accordingly, the High Court upheld both the SCN and the demand order.
Key Takeaways from the Judgment
- “Three months” under Section 73(2) CGST Act means three calendar months, not 90 days.
- SCNs issued within three calendar months prior to the order deadline under Section 73(10) are valid.
- Taxpayers must exercise due diligence in attending hearings and cannot claim a right to a specific number of adjournments.
- Availability of statutory appellate remedy makes a writ petition under Article 226 premature.
Relevant Legal Provisions
- Section 73(2), CGST Act:
SCN must be issued at least three months before the expiry of the three-year limitation under Section 73(10). - Section 73(10), CGST Act:
Tax order must be passed within three years from the due date of filing the annual return for the concerned FY. - Section 75(5), CGST Act:
Adjudicating authority may grant up to three adjournments, provided sufficient cause is shown. - Rule 80(1)(A), CGST Rules, 2017:
For FY 2020–21, the annual return filing deadline was extended to February 28, 2022.
Conclusion
The Delhi High Court’s ruling in the Tata Play Ltd vs. Sales Tax Officer case provides crucial clarity on the interpretation of limitation under Section 73 of the CGST Act. By settling the dispute over the “three months” language, the Court has reinforced the importance of calendar-based computation in GST procedural law. Taxpayers must also remain vigilant in attending personal hearings and exhausting appellate remedies before invoking constitutional jurisdiction.