Anita Traders Lko. U.P Vs State of U.P (Allahabad High Court)
Allahabad High Court quashes GST demand and show cause notice for FY 2017-18, ruling they were issued beyond the three-year limitation period.
Prayagraj: The Allahabad High Court has set aside a demand order and show cause notice issued to Anita Traders under Section 73 of the Uttar Pradesh State Goods and Service Tax Act, 2017, ruling that the actions were initiated beyond the prescribed time limit. The court’s decision relied on its own recent precedent concerning the limitation period for assessment orders related to the financial year 2017-18.
Anita Traders had approached the High Court seeking the quashing of a Demand Order dated December 2, 2023, and the preceding Show Cause Notice dated September 29, 2023, issued by the Assistant Commissioner, Lucknow. The petitioner contended that these were time-barred according to the provisions of the GST Act.
The petitioner’s counsel drew parallels with a previous order passed by the same court on November 12, 2024, in Writ Tax No. 264/2024, which addressed a similar issue of limitation under Section 73 for the financial year 2017-18.
In the referenced order from Writ Tax No. 264/2024, the court had examined the challenge to an assessment order and related forms also dated December 2, 2023 (among others), on the grounds of being barred by sub-section (10) of Section 73 of the UPGST Act. Section 73(10) mandates that an order under sub-section (9) of the same section must be issued within three years from the due date for furnishing the annual return for the financial year to which the tax or input tax credit issue relates.
The court in Writ Tax No. 264/2024 noted that as per Section 44(1) of the Act, the standard due date for filing the annual return is December 31st following the end of the financial year. For the financial year 2017-18, this date would ordinarily have been December 31, 2018. However, the due date for the annual return for FY 2017-18 was extended by a Central notification dated February 3, 2018, to February 5, 2020, which was subsequently adopted by the State of U.P. through a notification on February 5, 2020.
Based on this extended due date of February 5, 2020, the three-year limitation period stipulated in Section 73(10) for passing an order under Section 73(9) for the financial year 2017-18 expired on February 5, 2023.
The Revenue Department in that case had relied on a notification dated April 24, 2023, which purportedly extended the time limit under Section 73(10) for the financial year 2017-18 up to December 31, 2023. However, the High Court in Writ Tax No. 264/2024 critically examined paragraph 2 of the April 24, 2023 notification, which explicitly stated that its retrospective effect was only from March 31, 2023. The court reasoned that if the original three-year time limit expired prior to March 31, 2023, as it did on February 5, 2023, then the subsequent notification of April 24, 2023, could not retroactively extend a period that had already lapsed before its effective date of retrospectivity. Consequently, the court in Writ Tax No. 264/2024 held that the orders issued after February 5, 2023, for the financial year 2017-18 were beyond jurisdiction and time-barred, leading to the quashing of those orders.
Applying the same reasoning to the present case of Anita Traders, the Allahabad High Court noted that the impugned Demand Order dated December 2, 2023, and the Show Cause Notice dated September 29, 2023, were both issued well after the limitation period expired on February 5, 2023. As the learned Additional Chief Standing Counsel for the State could not dispute the court’s earlier order in Writ Tax No. 264/2024, the court found that the impugned orders in the present petition were similarly barred by limitation and issued without jurisdiction.
Accordingly, the High Court allowed the writ petition and quashed the Demand Order dated December 2, 2023, and the Show Cause Notice dated September 29, 2023. The court stated that necessary consequences would follow from this order, including the de-freezing of the petitioner’s bank accounts if they were frozen pursuant to the quashed demand.
FULL TEXT OF THE JUDGMENT/ORDER OF ALLAHABAD HIGH COURT
