Supreme Court to Decide Three-Month Limitation for GST Section 73 Notices

Surya Business Private Limited Vs State of Assam & Ors (Supreme Court of India)

Summary: The Supreme Court, in M/s Surya Business Private Limited v. State of Assam & Ors., SLP (C) No. 34476 of 2026, by its order dated 8 October 2026, issued notice in a dispute concerning the computation of the mandatory three-month interval between a show cause notice under Section 73(2) of the CGST Act, 2017 and the statutory deadline for issuing an adjudication order under Section 73(10). The Court was informed that an identical question was already pending in SLP (C) No. 18994 of 2026 and directed that both matters be listed together. The Supreme Court did not determine the limitation controversy or grant a stay of the impugned High Court judgment.

The petitioner, a GST-registered wholesale distributor of cellular phones in Jorhat, Assam, was served with a show cause notice dated 29 November 2024 proposing a demand of Rs. 33,03,968/- together with interest and penalty for FY 2020-21. The department alleged wrongful or excess availment of input tax credit from cancelled dealers, return defaulters and non-taxpayers. The annual return due date for FY 2020-21 had been extended to 28 February 2022, making 28 February 2025 the terminal date for passing an order under Section 73(10). The petitioner argued that the notice was required to be issued at least three months earlier, by 28 November 2024, and was therefore barred by limitation by one day. The Revenue maintained that the notice satisfied the statutory condition because December 2024, January 2025 and February 2025 were three intervening calendar months.

The Gauhati High Court’s Single Judge dismissed the writ petition on 12 February 2026. The Division Bench, in Writ Appeal No. 64 of 2026 decided on 15 September 2026, upheld that interpretation. It regarded Section 73(2) as prescribing a minimum interval linked to the terminal date under Section 73(10), rather than an independently expiring deadline determined exclusively by counting backwards to a corresponding date. Applying the definition of “month” under Section 3(35) of the General Clauses Act, 1897 and the exclusion of the first day under Section 9, it held that the notice dated 29 November 2024 was within time. The Division Bench also interfered with the ex-parte adjudication order dated 28 February 2025 and permitted the petitioner to file a reply within four weeks, followed by fresh adjudication within three months, subject to the consequences specified in its judgment.

The controversy reflects conflicting High Court approaches. In The Cotton Corporation of India v. Assistant Commissioner (ST) (Audit) (FAC), the Andhra Pradesh High Court held that the relevant notice deadline was 28 November 2024 and invalidated a notice issued on 30 November 2024. Conversely, the Delhi High Court in Tata Play Ltd. v. Sales Tax Officer Class II/AVATO accepted the intervening-calendar-month method and upheld a notice dated 30 November 2024. The Gauhati High Court followed the latter approach. The competing interpretations concern whether Section 73(2), which expressly requires notice at least three months “prior to” the Section 73(10) deadline, mandates backward corresponding-date calculation or permits calculation by excluding the notice date and counting the three succeeding calendar months.

The Supreme Court’s eventual interpretation may affect proceedings for FY 2020-21 involving notices issued on 29 or 30 November 2024 and other financial years where the terminal order deadline falls on the last day of a shorter month. For FY 2024-25 onwards, Section 74A introduces a different notice-and-order limitation framework. At present, however, the Supreme Court’s order is procedural: notice has been issued and the matters have been directed to be heard together. The legality of the impugned notice and the proper statutory method of computation remain open for adjudication.

Facts:

• M/s Surya Business Private Limited (“the Petitioner”) is registered under the CGST Act and the Assam Goods and Services Tax Act, 2017 (“the AGST Act”) and is engaged in the wholesale distribution of cellular phones at Jorhat, Assam.
• For FY 2020-21, the due date for furnishing the annual return stood extended to February 28, 2022, and the Petitioner filed its GSTR-9 and GSTR-9C on February 27, 2022. Consequently, the three-year time limit under Section 73(10) of the CGST Act for issuance of the adjudication order expired on February 28, 2025.
• The Revenue Department (“the Respondent”) issued a show cause notice dated November 29, 2024 (“the SCN”) under Section 73(1) of the CGST/AGST Act proposing a demand of Rs. 33,03,968/- along with interest and penalty, alleging wrongful/excess availment of Input Tax Credit (“ITC”) from cancelled dealers, return defaulters and non-taxpayers.
• The Petitioner challenged the SCN before the Hon’ble Gauhati High Court in WP(C) No. 6666 of 2024 solely on the ground of limitation. During the pendency of the writ petition, an interim order dated February 12, 2025 restrained coercive action, while an ex-parte order dated February 28, 2025 came to be passed under Section 73(9) of the CGST/AGST Act.
• The Petitioner contended that Section 73(2) of the CGST Act mandates issuance of the notice “at least three months prior” to the time limit under Section 73(10); hence, counting three months backwards from February 28, 2025, the last date for issuance of the SCN was November 28, 2024, and the SCN dated November 29, 2024 was a day beyond limitation.
• The Respondent contended that, after excluding the date of issuance, three calendar months (December 2024, January 2025 and February 2025) expired only on February 28, 2025, and the SCN was therefore within time.
• The learned Single Judge dismissed the writ petition vide judgment dated February 12, 2026, following which an amount of Rs. 10 lakh was recovered from the Petitioner. The Writ Appeal filed thereagainst was dismissed by the Division Bench vide judgment dated September 15, 2026. Aggrieved, the Petitioner filed the present Special Leave Petition before the Hon’ble Supreme Court.

Issues:

Whether a show cause notice for FY 2020-21 issued on November 29, 2024, when the time limit under Section 73(10) of the CGST Act for issuance of the order expired on February 28, 2025, was issued “at least three months prior” to such time limit as mandated by Section 73(2) of the CGST Act?

Whether the expression “three months” in Section 73(2) of the CGST Act is to be computed by applying the corresponding-date rule backwards from the terminal date under Section 73(10), or is satisfied if three full calendar months remain available after excluding the date of issuance of the notice?

The Hon’ble Gauhati High Court in M/s Surya Business Private Limited v. The State of Assam & Ors. [Writ Appeal No. 64 of 2026 dated September 15, 2026], which is impugned before the Hon’ble Supreme Court, had held as under:

• Observed that, Section 73 of the CGST Act sets out a single adjudicatory process in which the notice under Section 73(1) is merely the commencement of proceedings and Section 73(10) fixes their terminal point. Sections 75(1) and 75(10) of the CGST Act reinforce this link between the time prescribed for the notice and the time prescribed for the order.
• Noted that, there was no dispute that “month” means a calendar month under Section 3(35) of the General Clauses Act, 1897 (“the GC Act”), and that the first day is ordinarily excluded under Section 9 of the GC Act.
• Observed that, the object of Section 73(2) of the CGST Act is to ensure that proceedings are not initiated so close to the deadline that adjudication becomes illusory, and it prescribes a minimum interval rather than an independent limitation period expiring on a corresponding date calculated backwards.
• Held that, upon excluding November 29, 2024, the Petitioner had the full calendar months of December 2024, January 2025 and February 2025 before the terminal date, thereby satisfying the three-month requirement, and the corresponding-date construction would import a rigidity which Section 73(2) does not contain.
• Held that, while the corresponding-date principle is one possible method of computation, the view of the learned Single Judge was a reasonable construction and did not warrant interference in an intra-court appeal. Accordingly, the Writ Appeal was dismissed.
• Directed that, the ex-parte order dated February 28, 2025 stood interfered with, the Petitioner may file a reply to the SCN within four weeks, and the proceedings be concluded within three months thereafter, failing which the order dated February 28, 2025 shall revive.

Held by Hon’ble SC:

The Hon’ble Supreme Court in SLP (C) No. 34476 of 2026 held as under:

• Noted that, the counsel for the Petitioner submitted that an identical issue has arisen for consideration in SLP (C) No. 18994 of 2026.
• Directed that, notice be issued in the Special Leave Petition.
• Directed that, the matter be listed along with SLP (C) No. 18994 of 2026.

Our Comments:

Section 73(2) of the CGST Act requires the proper officer to issue the notice under Section 73(1) at least three months prior to the time limit specified in Section 73(10) for issuance of the order, while Section 73(10) requires the order to be issued within three years from the due date for furnishing the annual return for the relevant financial year. The pari materia provision for fraud cases, Section 74(2), similarly requires the notice to be issued at least six months prior to the five-year limit under Section 74(10). Section 75(1) excludes the period of any court stay from both computations, and Section 75(10) deems the adjudication proceedings to be concluded if the order is not issued within the period under Section 73(10).

Since the CGST Act does not define “month”, both sides draw on Section 3(35) of the GC Act, which defines a month as one reckoned according to the British calendar, and on the corresponding-date rule laid down by the Hon’ble Supreme Court in State of Himachal Pradesh v. Himachal Techno Engineers [(2010) 12 SCC 210] and by the House of Lords in Dodds v. Walker [(1981) 2 All ER 609], under which a period of three months expires on the corresponding date of the third month, or on the last day of that month where no corresponding date exists. The outcome turns on the direction of computation. Counted backwards from February 28, 2025, three months end on November 28, 2024. Counted forwards from a notice dated November 29 or 30, 2024, the corresponding date (February 29 or 30) does not exist in 2025, so the period ends on February 28, 2025. The Hon’ble Gauhati High Court effectively adopted the forward computation, read with the exclusion of the first day under Section 9 of the GC Act.

The assessee’s argument carries real textual weight. Section 73(2) measures the interval backwards from a fixed terminal date (“prior to the time limit”), not forwards from the date of the notice, and Section 9 of the GC Act is framed for periods running “from” a date. The words “at least” also indicate a minimum to be strictly complied with. Notably, the Hon’ble Gauhati High Court itself accepted that the corresponding-date approach is one possible method of computation and declined interference largely within the limited scope of an intra-court appeal. Where two constructions of a provision restricting the Revenue’s power to initiate proceedings are reasonably possible, the authoritative resolution by the Hon’ble Supreme Court is necessary.

The High Courts are divided on the issue:

• The Hon’ble Andhra Pradesh High Court in M/s The Cotton Corporation of India v. Assistant Commissioner (ST) (Audit) (FAC) [W.P. No. 1463 of 2025 dated February 05, 2025] quashed a show cause notice dated November 30, 2024 for FY 2020-21, holding that the corresponding date of the corresponding month is the cut-off, that the last date for issuing the notice was November 28, 2024, and that the time limit under Section 73(2) of the CGST Act is mandatory, so that even a delay of two days cannot be condoned. The Court reasoned that the safeguards of personal hearing and adjournments under Section 75 of the CGST Act would be rendered otiose if notices were issued without the minimum waiting period.
• Contrarily, the Hon’ble Delhi High Court in Tata Play Ltd. v. Sales Tax Officer Class II/Avato [W.P.(C) No. 4781 of 2025 dated July 29, 2025] held that “three months” under Section 73(2) of the CGST Act means three calendar months, being December 2024, January 2025 and February 2025, and upheld a show cause notice dated November 30, 2024 for FY 2020-21, relegating the assessee to the appellate remedy under Section 107 of the CGST Act.
• The Hon’ble Gauhati High Court in the present case aligned with the Hon’ble Delhi High Court and declined to follow the view of the Hon’ble Andhra Pradesh High Court, while also relying on Bibi Salma Khatoon v. State of Bihar [(2001) 7 SCC 197], Tarun Prasad Chatterjee v. Dinanath Sharma [(2000) 8 SCC 649] and Saketh India Ltd. v. India Securities Ltd. [(1999) 3 SCC 1].

The divergence is not merely academic. It arises wherever the Section 73(10) deadline falls on the last day of a month that is shorter than the month three months earlier. For FY 2020-21 (deadline February 28, 2025), notices dated November 29 and 30, 2024 are affected. Similarly, for FY 2018-19, where the deadline stood extended to April 30, 2024 under Section 168A of the CGST Act, notices dated January 31, 2024 fall in the same grey zone. Where the deadline is December 31 (as for FY 2017-18 and FY 2021-22 to FY 2023-24), both methods lead to September 30, and the controversy does not arise. For FY 2024-25 onwards, Section 74A of the CGST Act prescribes a period of 42 months from the due date of the annual return for the notice and 12 months from the notice for the order, so the “prior to” construction will cease to be relevant.

Since the Hon’ble Supreme Court has only issued notice and has not stayed the impugned judgment, the remand directions of the Hon’ble Gauhati High Court continue to operate in the Petitioner’s case. Taxpayers holding show cause notices or orders for FY 2020-21 based on notices dated November 29 or 30, 2024, or for FY 2018-19 based on notices dated January 31, 2024, should specifically plead the bar of limitation under Section 73(2) of the CGST Act in their replies, appeals under Section 107 and second appeals before the GSTAT, so that the ground is preserved and the benefit of the eventual ruling of the Hon’ble Supreme Court is not lost.

Cases Discussed

• Surya Business Private Limited v. State of Assam & Ors. (Gauhati High Court); Writ Appeal No. 64 of 2026; 15/09/2026; FY 2020-21 — The impugned Division Bench judgment upheld computation through three intervening calendar months and dismissed the writ appeal, while directing reconsideration of the ex-parte adjudication subject to specified conditions.
• Tata Play Ltd. v. Sales Tax Officer Class II/AVATO (Delhi High Court); W.P.(C) No. 4781 of 2025; 29/07/2025; FY 2020-21 — The Court adopted calendar-month computation and treated the SCN issued on 30 November 2024 as satisfying Section 73(2).
• The Cotton Corporation of India v. Assistant Commissioner (ST) (Audit) (FAC) (Andhra Pradesh High Court); W.P. No. 1463 of 2025; 05/02/2025; FY 2020-21 — The Court regarded 28 November 2024 as the cut-off and quashed an SCN issued on 30 November 2024.
• State of Himachal Pradesh v. Himachal Techno Engineers (Supreme Court); (2010) 12 SCC 210; 26/07/2010 — Cited for computation of statutory periods expressed in calendar months and the corresponding-date principle.
• Bibi Salma Khatoon v. State of Bihar (Supreme Court); (2001) 7 SCC 197; 21/08/2001 — Cited for interpretation and computation of a period expressed in months.
• Tarun Prasad Chatterjee v. Dinanath Sharma (Supreme Court); (2000) 8 SCC 649 — Cited on the computation of statutory limitation.
• Saketh India Ltd. v. India Securities Ltd. (Supreme Court); (1999) 3 SCC 1 — Cited concerning exclusion of the first day when calculating limitation.
• Dodds v. Walker (House of Lords); (1981) 2 All ER 609 — Cited on computation by corresponding calendar dates.

Related Supreme Court Proceedings: The interpretation of the three-month notice period under Section 73(2) of the CGST Act is now before the Supreme Court. For details, read Supreme Court to Decide Three-Month Limitation for GST Section 73 Notices.

FULL TEXT OF THE ORDER OF SUPREME COURT

1. Learned counsel for the petitioner submits that identical issue has arisen for consideration in SLP (C) No. 18994/2026.

2. Issue notice.

3. List along with SLP (C) No. 18994/2026.