Madras High Court Rejects Bunching of Show Cause Notices to Extend Limitation Period

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The Madras High Court recently delivered a significant judgment in the case of Titan Company Ltd. vs. Joint Commissioner of GST & Central Excise, addressing the issue of bunching of show cause notices under the CGST Act, 2017.


The petitioner’s primary contention was that the respondent had issued a bunching of show cause notices for five Assessment Years, starting from 2017-18 to 2021-22.

The petitioner argued that such bunching was impermissible under Section 73 of the CGST Act, as it only allows the determination of tax within a specified limitation period and prohibits extending the period through bunching of notices.

The Section 73(10) of the Act imposes a three-year limitation period for determining tax from a person, calculated from the due date for furnishing the annual return for the relevant financial year. The petitioner argued that the bunching of show cause notices was an indirect attempt to extend the limitation period, which goes against the statutory provisions.

It was countered that there was no provision under Section 73 of the Act explicitly prohibiting the issuance of bunching of show cause notices.

The court examined Section 73(10) of the Act, emphasizing that the limitation period for determining tax is distinct for each assessment year. 

It held that the bunching of show cause notices for multiple assessment years was against the spirit of the law.

Well........

The judgment sets a precedent by affirming that the limitation period for determining tax under the CGST Act is specific to each assessment year. It underscores the importance of adhering to statutory timelines and prevents authorities from indirectly extending the limitation period through the bunching of show cause notices.

The decision reinforces the principles of fairness and adherence to legal procedures in taxation matters.


R.SRIVATSAN

NACIN, Chennai

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