Time Limits for Issuance of SCN

Understanding the Time Limits for Issuance of SCN and Adjudication Orders Under Sections 73 and 74 of the CGST Act, 2017

In the dynamic framework of Goods and Services Tax (GST) law in India, strict adherence to statutory timelines is paramount to ensure seamless compliance and avoid protracted litigation. Among the crucial procedural requirements are the timelines for issuance of Show Cause Notices (SCNs) and adjudication orders under Sections 73 and 74 of the Central Goods and Services Tax (CGST) Act, 2017.

This article offers a comprehensive insight into these provisions, particularly concerning the financial years 2017-18, 2018-19, 2019-20, and 2020-21, incorporating the latest updates and clarifications issued by the CBIC (Central Board of Indirect Taxes and Customs).

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Section 73 and Section 74 of the CGST Act: A Brief Overview

• Section 73 deals with cases where tax is not paid, short paid, or input tax credit (ITC) is wrongly availed or utilized for reasons other than fraud, willful misstatement, or suppression of facts.
• Section 74 pertains to similar instances but arising due to fraud, willful misstatement, or suppression of facts with intent to evade tax.

Understanding the distinction is critical because Section 74 carries stiffer penalties and a longer limitation period compared to Section 73.

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Time Limits for Issuance of SCN and Adjudication Order: Section 73 (Non-Fraud Cases)

1. Statutory Framework

Under Section 73(2), the proper officer must issue a Show Cause Notice (SCN) at least three months prior to the time limit prescribed for passing the adjudication order.
The time limit for passing an order under Section 73(10) is:

• Within 3 years from the due date for filing the Annual Return for the financial year to which the tax not paid, short paid, or erroneous refund relates.

Therefore:

• The SCN must be issued within 2 years and 9 months from the due date of filing Annual Return or from the date of erroneous refund, whichever is applicable.

2. Practical Illustration

Suppose the due date for filing the Annual Return for FY 2017-18 was 7th February 2020 (after considering extensions).

• The last date for passing the adjudication order would be 7^th February 2023 but considering Notification No. 09/2023 which extended the time limit for issuing order till 31^st Day of December 2023.
• Consequently, the SCN must be issued by 30^th September 2023 (three months prior).

3. Important Notifications for Extensions

Recognizing the operational challenges faced due to the COVID-19 pandemic, the CBIC, exercising its powers under Section 168A, has extended certain time limits:

• Notification No. 09/2023–CT dated 31.03.2023: Extended the time limit for passing orders for FY 2017-18, 2018-19, and 2019-20.
• Notification No. 56/2023–CT dated 28.12.2023: Further extended timelines for FY 2018-19 and 2019-20.

Students and professionals must carefully map these notifications to ascertain the validity of any ongoing or upcoming SCNs.

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Time Limits for Issuance of SCN and Adjudication Order: Section 74 (Fraud Cases)

1. Statutory Framework

Under Section 74(2), the proper officer must issue the SCN at least six months prior to the expiry of the limitation period prescribed for passing the adjudication order.
The time limit under Section 74(10) is:

• Within 5 years from the due date of filing the Annual Return or from the date of erroneous refund, whichever is applicable.

Hence:

• The SCN must be issued within 4 years and 6 months from the due date of filing of the Annual Return.

2. Practical Illustration

For FY 2018-19, if the due date for filing Annual Return was 31^st December 2020:

• The deadline for adjudication order would be 31^st December 2025 but considering Notification No. 09/2023 and 56/2023 which extended the time limit for issuing order till 31^st Day of April 2024.
• Thus, the SCN must be issued by 31st January 2025 (six months prior).

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Key Dates: Due Dates of Filing Annual Return for Relevant Financial Years

To correctly compute limitation periods, it is crucial to know the actual due dates for Annual Returns (Form GSTR-9), considering various extensions:

Financial Year	Extended Due Date for GSTR-9
FY 2017-18	5th and 7th February 2020
FY 2018-19	31st December 2020
FY 2019-20	31st March 2021
FY 2020-21	28th February 2022

Note: Always cross-verify with applicable notifications or circulars issued at the relevant time.

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Extended Time Limits Based on Notifications (Section 168A Authority)

Here’s a summary of how the adjudication timelines stand post extensions via notification no. 09/2023 and 56/2023:

Particulars	Time Limit	2017-18	2018-19	2019-20	2020-21
SCN - Extended deadline to issue a notice under section 73(2) of the CGST Act	3 Years from Annual Return	30th September, 2023	31st January, 2024	31st May, 2024	30th November, 2024
Order - Extended deadline to issue a notice under section 73(10) of the CGST Act	3 Years from Annual Return	31st December, 2023	30th April, 2024	31st August, 2024	28th February, 2025
SCN - Extended deadline to issue a notice under section 74(2) of the CGST Act	5 Years from Annual Return	5th August, 2024	30th June, 2025	30th September, 2025	31st August, 2026
Order - Extended deadline to issue a notice under section 74(10) of the CGST Act	5 Years from Annual Return	5th February, 2025	31st December, 2025	31st March, 2026	28th February, 2027

👉 Professionals must carefully analyse the applicable notification before challenging the validity of any SCN on the ground of limitation.

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Practical Tips for Students and Practitioners

• Always calculate limitation periods with utmost precision: Even a day's delay in issuance may vitiate the SCN.
• Distinguish clearly between Section 73 and 74 cases: Incorrect classification could be fatal to proceedings.
• Maintain a tracker for Annual Return due dates and related limitation periods.
• Stay updated with CBIC notifications and circulars: These can have significant impacts on litigation strategies.
• Advise clients proactively if you observe potential limitation issues in ongoing proceedings.

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Conclusion

Compliance with the prescribed timelines under Sections 73 and 74 is not merely procedural it is substantive in nature. Failure to adhere to these limits can render the proceedings void, leading to loss of revenue for the government and relief for taxpayers.
With the Central Board of Indirect Taxes and Customs (CBIC) periodically issuing clarifications and extending deadlines, taxpayers and professionals must remain vigilant.
A sound understanding of the nuances around limitation periods empowers GST practitioners to protect their clients' interests effectively and ensures robust compliance practices.

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Disclaimer:
This article is intended solely for educational and informational purposes. It should not be construed as a legal opinion or professional advice. While due care has been taken in preparing this document, the author assumes no responsibility for errors or omissions or for any consequences arising from the use of this information.

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